According to two key axioms of technical analysis, prices trend and history repeat themselves. In an upswing, the forces of demand (bulls) are in charge, whereas in a downturn, the forces of supply (bears) are in charge. Prices do not, however, continue to trend indefinitely, and then as the balance of power swings, a chart pattern emerges. A strong trend is indicated by certain patterns, such as a parallel channel. The vast majority of chart patterns, however, are divided into two categories: reversal and continuation. Reversal patterns are divided into top and bottom forms and signify a trend change. Continuation patterns denote a trend pause with the expectation that the prior direction will restart after some time. A pattern does not even have to appear after a big advance or drop to be considered a reversal pattern. A rectangle, for example, can be categorized whether as reversal or continuation. As even the pattern develops, a lot depends on prior price movement, volume, and other factors. The science of technical analysis has become the art of technical analysis at this point.

Reversal and continuation patterns are key chart patterns in technical analysis, each signalling different potential market movements.

Reversal patterns indicate a change in trend direction. For example, if an asset is in an uptrend, a reversal pattern suggests the price may soon move downward. Common reversal patterns include head and shoulders, double tops, and double bottoms. These patterns help traders anticipate potential turning points, allowing them to adjust their positions.

Continuation patterns, on the other hand, suggest that the existing trend will persist after a temporary consolidation. Patterns like flags, pennants, and triangles typically indicate that a brief pause is likely before the trend resumes. Identifying these patterns helps traders hold their positions with confidence, enhancing trading strategy alignment with market momentum.