Unit 2 · Level 3 · Chart Patterns
Reversals: tops & bottoms
Trends rarely die in one candle. They die in failures. The DOUBLE TOP: price hits a high, pulls back, tries again… and fails at the same zone. Two failures = conviction broken. The HEAD & SHOULDERS adds a middle higher push (the head) that also fails: three strikes, structure gone.
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What you get asked
What confirms a double top, the moment it becomes tradable?
Two tops alone = maybe a range. The neckline break is the moment the structure finally fails. Before that, buyers are still alive.
Match the reversal to its anatomy
Every reversal pattern is the same event in costume: a trend making its FIRST lower high / higher low. Structure breaking, League 1 style.
A head & shoulders is really just a trend printing its first lower ___, dressed in a famous name.
Demystified: the right shoulder IS the lower high. If you know market structure, you knew this pattern before learning its name.
Where does divergence (League 3, Lesson 2) strengthen a reversal pattern most?
The retest arriving with weaker momentum. Double top + bearish divergence + volume fading on top two = three independent witnesses saying the same thing. That's an A-grade case.
The classic beginner error with reversal patterns?
Trading a prediction, not a confirmation. 'Calling the top' is a lottery ticket; trading the BREAK is a setup. The first pays in bragging rights, the second in R. 🐜
The rest of this unit
Flags, triangles, double tops, traps: crowd psychology drawn on a chart.