Reversal Chart Patterns: Master Double Top, Double Bottom, Cup and Handle, and Head and Shoulders
At Trendoscope, we’re committed to equipping traders with cutting-edge tools to simplify technical analysis and enhance market decisions. Our Recursive Reversal Chart Patterns Indicator, a free, open-source tool on TradingView, automatically detects high-probability reversal patterns, including Double Top, Double Bottom, Triple Top, Triple Bottom, Cup and Handle, Inverse Cup and Handle, Head and Shoulders, and Inverse Head and Shoulders.
Link to the Indicator: Recursive Reversal Chart Patterns
Why Reversal Patterns Are Essential for Traders
Reversal chart patterns are vital for spotting potential trend shifts in financial markets. Whether trading stocks, forex, or cryptocurrencies, identifying patterns like Double Top, Double Bottom, Triple Top, Triple Bottom, Cup and Handle, Inverse Cup and Handle, Head and Shoulders, or Inverse Head and Shoulders offers actionable insights into market reversals. The Recursive Reversal Chart Patterns Indicator automates this process, saving time and boosting precision.
Double Top Pattern: Identifying Bearish Reversals
The Double Top is a bearish reversal pattern that appears after an uptrend, signaling a potential trend reversal. It features two peaks at similar price levels, indicating fading buyer momentum. The Recursive Reversal Chart Patterns Indicator accurately detects Double Top formations, helping traders pinpoint short-selling opportunities.
Key Features: Two highs (tops) separated by a trough, confirmed by a break below the neckline.
Trading Insight: A Double Top with increased volume on the neckline break strengthens the bearish signal.
Double Bottom Pattern: Seizing Bullish Opportunities
The Double Bottom, a bullish reversal pattern, forms after a downtrend with two lows at similar levels, suggesting seller exhaustion. Our indicator excels at identifying Double Bottom patterns, enabling traders to capitalize on emerging uptrends.
Key Features: Two lows (bottoms) with a peak between, confirmed by a breakout above the neckline.
Trading Insight: Higher volume on the Double Bottom breakout enhances the bullish signal.
Triple Top Pattern: Confirming Strong Bearish Reversals
The Triple Top is a more robust bearish reversal pattern, featuring three peaks at similar price levels. It indicates repeated failure to break resistance, signaling a strong reversal. The indicator’s recursive algorithm ensures precise Triple Top detection for confident trade setups.
Key Features: Three highs separated by troughs, confirmed by a neckline break.
Trading Insight: A Triple Top with consistent resistance and a sharp neckline break is highly reliable.
Triple Bottom Pattern: Spotting Robust Bullish Reversals
The Triple Bottom is a bullish reversal pattern with three lows at similar levels, indicating strong support and potential for an uptrend. The indicator accurately identifies Triple Bottom patterns, helping traders enter bullish trades with confidence.
Key Features: Three lows with peaks between, confirmed by a breakout above the neckline.
Trading Insight: A Triple Bottom with increasing volume on the breakout signals strong bullish momentum.
Cup and Handle Pattern: A Hybrid for Continuation and Reversals
The Cup and Handle is a versatile pattern that can signal both continuation and reversal, depending on context. It features a "U"-shaped cup followed by a smaller consolidation (handle). The indicator reliably detects Cup and Handle formations, ideal for breakout trading.
Key Features: A rounded bottom (cup) and a short consolidation (handle), confirmed by a breakout above the handle’s resistance.
Trading Insight: A Cup and Handle in a trending market with strong breakout volume is highly effective.
Inverted Cup and Handle Pattern: Detecting Bearish Reversals
The Inverted Cup and Handle is a bearish reversal pattern, often forming after an uptrend. It features an inverted "U" shape (cup) followed by a consolidation (handle). The indicator’s algorithm accurately identifies Inverted Cup and Handle patterns, aiding bearish trade setups.
Key Features: An inverted cup followed by a handle, confirmed by a break below the handle’s support.
Trading Insight: The Inverse Cup and Handle is most reliable with a sharp breakdown on high volume.
Head and Shoulders Pattern: Forecasting Major Bearish Reversals
The Head and Shoulders is a classic bearish reversal pattern, signaling a shift from an uptrend to a downtrend. It consists of three peaks: a higher peak (head) flanked by two lower peaks (shoulders). The indicator ensures precise Head and Shoulders detection for major market moves.
Key Features: Left shoulder, head, right shoulder, and a neckline; confirmed by a break below the neckline.
Trading Insight: A Head and Shoulders with a steep neckline break indicates a strong reversal.
Inverse Head and Shoulders Pattern: Predicting Bullish Reversals
The Inverse Head and Shoulders is a bullish reversal pattern, signalling a shift from a downtrend to an uptrend. It features three troughs: a lower trough (head) between two higher troughs (shoulders). The indicator accurately detects Inverse Head and Shoulders patterns, supporting bullish trade entries.
Key Features: Left shoulder, head, right shoulder, and a neckline; confirmed by a break above the neckline.
Trading Insight: An Inverse Head and Shoulders with high breakout volume signals robust bullish potential.
How the Recursive Reversal Chart Patterns Indicator Works
The Recursive Reversal Chart Patterns Indicator uses a recursive algorithm to analyze price action and detect Double Top, Double Bottom, Triple Top, Triple Bottom, Cup and Handle, Inverse Cup and Handle, Head and Shoulders, and Inverse Head and Shoulders patterns. Built on TradingView’s Pine Script, it offers:
Automated Pattern Detection: Instantly identifies all supported patterns across any timeframe or market.
Customizable Settings: Adjust sensitivity and pattern criteria to match your trading style.
Visual Clarity: Plots patterns with clear labels and necklines for quick, actionable analysis.
Open-Source Access: Explore and modify the code, fostering transparency and community collaboration.
Why Choose Trendoscope’s Indicator?
Precision and Reliability
The recursive algorithm ensures accurate detection of Double Top, Double Bottom, Triple Top, Triple Bottom, Cup and Handle, Inverse Cup and Handle, Head and Shoulders, and Inverse Head and Shoulders, reducing false signals.
Versatility Across Markets
From spotting a Triple Bottom in stocks to a Head and Shoulders in forex, the indicator adapts to stocks, forex, crypto, and more.
Free and Open-Source
Available at no cost on TradingView, this open-source tool allows traders to verify and customize the code.
Community Support
Connect with traders on Telegram to share insights and learn from others using the indicator.
Practical Applications
The Recursive Reversal Chart Patterns Indicator suits various trading strategies:
Day Trading: Detect Double Top or Triple Bottom patterns on 15-minute or 1-hour charts for intraday trades.
Swing Trading: Use Cup and Handle or Inverse Head and Shoulders on daily charts for multi-day reversals.
Long-Term Investing: Identify Triple Top or Double Bottom patterns in stocks or indices for major trend shifts.
Combine with RSI, MACD, or support/resistance levels to confirm signals from Double Top, Double Bottom, Triple Top, Triple Bottom, Cup and Handle, Inverse Cup and Handle, Head and Shoulders, or Inverse Head and Shoulders.
Architecture using Zigzag and Pattern Ecosystem
Many of you may be cursing me for publishing too many libraries. But, these are all preparations for something big. Like other indicators in the Zigzag and Patterns Ecosystem, this too uses a bunch of libraries.
🎯Major direct dependencies
🎯Indirect dependencies
🎯Minor dependencies
Indicator Settings
Generic and Zigzag Settings.
Note: In case of timeout, please decrease the value of the depth parameter
Pattern Selection
Having all the patterns selected on the chart may also cause timeouts and will make the chart look messy. It is better to limit one or two patterns on the chart to have a clear picture.
Scanner Settings
Scanner Settings
Indicators
These are options to use indicators as secondary confirmation to calculate divergence. If selected, the patterns are shown only if the divergence data is inline. The option is also available to plugin external indicators. These calculations are not straightforward and not easy to measure by manual inspection. This feature at present is purely experimental.
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