Topstep Futures Technical Analysis 101

Symmetrical triangles are typically considered a continuation pattern, consisting of a series of lower highs and higher lows, with upper and lower trend lines converging towards an apex.

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Ascending & Descending triangles have a unique trait; no matter where you are in the progression of a trend, an ascending triangle is alway bullish, and a descending triangle is always bearish.

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The expanding triangle is arguably the most rare of the triangle patterns and is usually considered to be a bearish setup found at major market tops.

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The Flag is one of the most common chart patterns found in technical analysis, and can represent either a bullish or bearish continuation setup.

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This shorter time frame setup usually forms mid-trend and represents a temporary pause, or consolidation, that moves counter to the prevailing trend.

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Another pattern you should be familiar with is the Wedge Formation. Compared to shorter time frame setups like flags and pennants, the wedge is more of an intermediate formation that develops over a period of up to 50 price bars. Wedges represent a pause in trend, and can be either bullish or bearish, depending on the prevailing trend.

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The rectangle formation is another chart pattern that represents a pause, or consolidation period, of a prevailing trend. This formation is unique in that volume holds more weight than price when trying to predict the direction of the breakout.

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Like most reversal patterns, the H&S is most recognizable to an analyst after it has been formed. The real trick lies in being able to identify the attributes of the formation while it’s setting up so you can be ready to initiate a position once the pattern is confirmed.

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The H&S Bottom is basically a mirror image of the H&S Top, and consists of five key reversal points; three troughs, making up the left shoulder, the head and the right shoulder; and two peaks connected by a trendline, also known as the neckline. The major difference between the two setups is that the volume patterns are much more significant for the H&S Bottom.

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Double tops are one of the more frequently seen reversal chart patterns you will come across. They are identified by two peaks, at or near the same price level, separated by a trough in the middle.

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The double bottom is first and foremost a reversal pattern. This means that whatever direction the trend was going when the double bottom formed can be expected to reverse once the pattern is confirmed.

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Triple tops are commonly found at key resistance areas, and represent multiple unsuccessful attempts of buyers to break through that level. Because this pattern represents a period of price consolidation, it can easily be mistaken for a rectangle formation while it is setting up.

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The same characteristics that make up the Triple Top also apply to the Triple Bottom, they are simply reversed.

The weight of the triple bottom pattern relies heavily on the time it takes to form, and the size of the moves between peaks and troughs.

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The V Formation is a fairly common reversal pattern and is widely considered the most difficult pattern to identify while it’s forming because of the swift and unpredictable trend reversal it produces. There are very few, if any, early warning signs to tip you off that a true reversal in trend is taking place.

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The definitions of support and resistance are straightforward enough; support is an area where more aggressive buyers meet sellers, and resistance is an area where more aggressive sellers meet buyers. The question is whether or not their roles will reverse when the area is violated, i.e., will resistance become support?

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