Session 10 · 4 min read
Bearish Chart Patterns
Four bearish structures worth recognising on sight — descending triangle, bear flag, head and shoulders, double top — each with entry, invalidation, and a measured target.
A chart pattern is structure that repeats often enough to have earned a name. The shape is not magic. Each one encodes a specific, recurring way that sellers gain ground or buyers run out of it.
Learning the shape is really learning to spot that fight faster than you could by reading every candle from scratch.
Patterns are not a substitute for risk rules
Trading these four shapes without the sizing and stop discipline from Session 02 is decorated gambling. A recognisable picture does not make a trade safe — every pattern below still needs a real stop and a sized position behind it.
Core principle
A pattern earns attention because it has captured a real behaviour before, not because a shape owes you a repeat performance this time. Judge it on the structure underneath, not on how tidy it looks.
Descending Triangle
A descending triangle forms when each rally fails lower than the last — a falling line of lower highs — while declines keep bottoming at roughly one price, drawing a flat floor underneath.
The flat floor shows steady demand defending a single level. The falling highs show sellers accepting ever-worse prices to meet it. It usually resolves when the floor gives way, because its defenders have been absorbing more aggressive selling with less room each time.
Descending Triangle
- Entry
- A confirmed close below the flat floor, or the retest of that floor from underneath afterwards.
- Invalidation
- A close that reclaims the last failed rally high inside the triangle, which erases the pattern’s defining slope.
- Target
- Take the triangle at its widest and subtract that height from the breakdown level.
Bear Flag
A bear flag opens with a sharp decline — the pole — followed by a shallow drift back up on thin volume, the flag.
The pole shows sellers in control. The drift is a pause rather than a recovery: it lacks the volume and range that would suggest buyers are actually winning anything back. It typically resolves by continuing the original decline once the drift runs out of momentum.
Bear Flag
- Entry
- A break below the low of the flag.
- Invalidation
- A close above the flag’s high, which argues the drift was a genuine recovery rather than a pause.
- Target
- Expect roughly another pole’s worth of decline, measured from where the flag broke.
Head & Shoulders
A head and shoulders is three peaks in sequence: a high, a higher one, and a third that cannot reach the second. The middle peak — the head — is peak buyer enthusiasm. The shoulders either side show buyers unable to repeat it.
A neckline drawn under the two lows between the peaks marks the price whose break confirms buyers lost control across all three attempts, not just the last one.
Head & Shoulders
- Entry
- A close below the neckline, or its retest from underneath after the break.
- Invalidation
- A close back above the right shoulder, which undermines the case that buyers had exhausted themselves.
- Target
- Measure head to neckline, then subtract that distance from the neckline.
Double Top
A double top forms when price attacks roughly the same area twice and fails both times, with a valley between the attempts.
Two failures at one price is stronger evidence than one, because the level held even after buyers regrouped. The pattern confirms when price surrenders the valley, showing the second failure did more damage than the first.
Double Top
- Entry
- A break below the valley separating the two tops.
- Invalidation
- A close above the tops, which erases the evidence that resistance was holding at all.
- Target
- The drop from the tops to the valley, repeated once more below the valley.
Treat those numbers as scaffolding. They give you a consistent way to size and exit while the shapes are still unfamiliar. The market agreed to none of them — plenty of textbook patterns stall short of target, and plenty of ugly ones run further than they should.
One more thing: trading these to the downside usually means shorting. You typically borrow the shares you sell, and because there is no ceiling on a price, the loss has no natural limit — unlike a long, which can only fall to zero. Size down while you are learning, and let the stop define the cost rather than your conviction.
Put it into practice
Reading builds knowledge; journaling builds skill. Track your trades and see your own patterns.
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