In order to look for good "setups" in an instrument, as well as identify which trend it is trading in, it is common to use patterns. Most instruments are traded within a specific pattern that many players look at and use. By learning these, you can make good decisions for likely outcomes of future price movements.

Patterns are found in price charts and are often defined as bullish or bearish. This is based on whether previous patterns that have been similar have been shown to give positive or negative results in price.

Whether you are an investor or a trader, the main point is to find out which pattern works best for your models. By studying many charts, you can learn to early identify which pattern different instrument is about to make or has already made. You will then quickly get an overview of whether the instrument has a downward, consolidation, or upward trend, which can be used as a basis for investment or not.

There is a myriad of different patterns in technical analysis, the most commonly used and well-known can be found in the images below:

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cheat sheet bullish patterns bearish patterns
Pattern med ekte candlestick tecnical charts patterns candlesticks


As you can see, there is a wide range of patterns you can look for, some indicating that the instrument should turn to a positive trend, others that it is heading towards a negative trend, or reversing a trend. As mentioned, it is important that you learn the most commonly used, so that you can quickly recognize these in price graphs (charts). The probability that the different patterns will have a positive or negative effect has been calculated by different actors. Links to probability calculations for the different patterns can be found here:

Regardless of the probabilities of outcomes, and the type of investor you are, pattern recognition can be a very good tool to have as a TA investor. There are many players who look for such patterns, which in addition quickly make them self-fulfilling.

As an investor and trader, you want to get a return on your investments. Being able to identify whether a stock follows a certain pattern or a trend can therefore be very beneficial. You then avoid buying into instruments that do not yet have an upward and positive trend. You quickly save a lot of time, money, and frustration by using these technical patterns before doing an investment.