Chart Pattern

A chart pattern is a named shape formed by the price history itself — a sequence of highs and lows arranged in a way that has been given a label. Unlike an indicator, a pattern is not computed but recognised, which means its boundaries are drawn by a person, or by a rule someone wrote, and two readers can mark the same stretch of chart differently while both follow the definition they were taught. Naming a shape describes what has already been drawn. A pattern is defined by bars that have closed, and the account of what typically follows one belongs to the tradition the name comes from rather than to the chart; the same shape occurs in price histories where nothing followed at all, and it appears or disappears when the chart's time frame is changed. Patterns are also usually described together with a condition that has not yet happened — a level to be broken, a boundary to be closed beyond — so the shape and the outcome are two separate things, and only the first is on screen.