15 Bearish trading patterns
Bearish candlestick patterns
15 of the most commonly used and recognized bearish trading patterns
Head and Shoulders Pattern: This classic pattern indicates a potential trend reversal from bullish to bearish and consists of three peaks, with the middle peak being the highest.
Double Top: This pattern forms after an uptrend and suggests a potential reversal. It consists of two peaks at approximately the same price level.
Triple Top: Similar to the double top, the triple top has three peaks at roughly the same price level, signaling a strong resistance level and a possible bearish reversal.
Descending Triangle: This pattern forms when the price makes lower highs but remains at a consistent support level, suggesting a potential breakdown and bearish movement.
Symmetrical Triangle: While it’s a neutral pattern, it often breaks to the downside, indicating a potential bearish move. It consists of converging trendlines.
Descending Wedge: This wedge pattern slopes downward and often results in a bearish breakout. It is characterized by lower highs and lower lows.
Bearish Flag: A bearish flag forms after a sharp price decline (flagpole) and a sideways consolidation (flag), indicating a potential continuation of the downward trend.
Bearish Pennant: Similar to the bearish flag, the bearish pennant is a short-term consolidation pattern that appears after a sharp price decline, suggesting a potential continuation of the bearish trend.
Evening Star: A three-candlestick pattern that starts with a large bullish candle, followed by a small indecisive candle (the “star”), and ends with a large bearish candle, indicating a reversal of the current trend.
Dark Cloud Cover: This two-candlestick pattern occurs when a bullish candle is followed by a bearish candle that opens above the prior day’s close but closes below the midpoint of the first candle, signaling a bearish reversal.
Shooting Star: A single candlestick pattern with a small body and a long upper shadow, indicating a rejection of higher prices and suggesting a possible reversal.
Bearish Engulfing Pattern: This two-candlestick pattern forms when a smaller bullish candle is followed by a larger bearish candle that completely engulfs the previous one, signaling a bearish reversal.
Island Reversal: This pattern occurs when a gap separates a group of candles from the preceding price action, suggesting a potential reversal in the direction of the gap.
Triple Top: Similar to the double top, the triple top has three peaks at roughly the same price level, signaling a strong resistance level and a possible bearish reversal.
Descending Triangle: This pattern forms when the price makes lower highs but remains at a consistent support level, suggesting a potential breakdown and bearish movement.
These bearish patterns are commonly used by traders to identify potential opportunities for short positions or selling existing long positions. However, as with bullish patterns, they should be used in conjunction with other analysis methods and risk management techniques to make informed trading decisions.
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Cory has been a professional trader since 2005, and holds a Chartered Market Technician (CMT) designation. He has been widely published, writing for Technical Analysis of Stock & Commodities magazine, Investopedia, Forbes, Benzinga, and others.