4 Day Trading Patterns Every Day Trader Should Know

Jitanchandra Solanki
13 Min read

Day trading patterns are repeated patterns of behaviour that occur from the activity of buyers and sellers in a market. They can be useful in identifying who is in control of the market and where prices could potentially move next.  

4 Day Trading Patterns to Know 

Below is a list of some of the most common day trading patterns that every day trader should know but there are more chart patterns available. These patterns can form on multiple markets such as stocks, forex, indices and commodities. 

No chart pattern will work all of the time but they can give a trader more understanding of what is happening in the market.  It is important to not only use intraday trading patterns to make decisions but also to incorporate other forms of technical analysis and proper risk management tools together. 

Ascending Triangle 

An ascending triangle pattern highlights a period of consolidation after an upward move before it continues to move higher. 

The ascending triangle pattern is formed through a horizontal resistance line at the swing highs of the market and an ascending trend line along the swing lows of the market acting as a support level.  

It takes at least two swing highs to reject the same price level to form a horizontal resistance line and at least two higher swing lows to form the trend line. If the price breaks through the horizontal resistance line it is a possible sign of the uptrend continuing.  

However, the price can break through the bottom of the ascending triangle pattern suggesting a failure of the market to go higher and a possible downtrend developing.  

Descending Triangle 

A descending triangle pattern highlights a period of consolidation after a downward move before it continues to move lower. 

The descending triangle pattern is formed through a horizontal support line at the swing lows of the market and a descending trend line along the swing highs of the market acting as a resistance level. 

It takes at least two swing lows to reject the same price level to form a horizontal support line and at least two lower swing highs to form the trend line. If the price breaks through the horizontal support line it is a possible sign of the downtrend continuing.  

As with an ascending triangle formation, the price can break through the other side. If the price does break through the top of a descending triangle pattern it suggests a failure of the market to continue its trend lower and possible sign of a new uptrend forming.  

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How to Day Trade Ascending & Descending Triangle Patterns 

Day trading strategies using ascending and descending triangle patterns can be done across forex, stocks, indices and commodities and on multiple day trading timeframes such as 5-minute, 15-minute, 30-minute and 1-hour charts.  

Below is an example of an ascending triangle pattern on the EURCAD 15-minute chart for illustration purposes.  

Source: Admirals MetaTrader 5, EURCAD, M15 - Data range: from 14 Sep 2022 to 18 Sep 2022. Captured on 18 Sep 2022. Please note: Past performance is not a reliable indicator of future performance. 

The ascending triangle pattern shows multiple swing high rejects at the upper horizontal resistance line and at least two swing higher lows creating a trend line. Some traders may draw their price levels at the lows and highs of a bar or candle but also the closing prices as well.  

When day trading ascending triangle patterns traders can either trade as the price is breaking the top horizontal resistance line or wait for a bar to close above it first of all. Stop losses could be below the low of this bar or beneath the trend line, just in case it is a false breakout at the top.  

Any form of day trading is challenging and carries a higher degree of risk so it’s well worth starting on a demo account first to build up the necessary skills.  

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Bullish Head and Shoulders

A bullish head and shoulders pattern forms when a large trough has developed at a horizontal resistance line and with two smaller troughs on either side of it. The horizontal resistance line is known as the neckline.  

Traders typically see this pattern as a bullish reversal pattern. If the price breaks through the neckline it confirms a new swing higher high leaving behind a higher high and higher low cycle which traders will often see as a bullish sign.   

Bearish Head and Shoulders 

A bearish head and shoulders pattern forms when a large peak has developed at a horizontal support line and with two smaller peaks on either side of it. The horizontal support line is known as the neckline. 

Traders typically see this pattern as a bearish reversal pattern. If the price breaks through the neckline it confirms a new swing lower low leaving behind a lower low and lower high cycle which traders will often see as a bearish sign.   

How to Day Head and Shoulders Patterns 

As with most day trading patterns, head and shoulders can be seen across different markets and across different timeframes. Below is an example of a bullish head and shoulders pattern that developed on the 5-minute chart of the DAX40 index.  

It shows that the price struggles to break through a horizontal resistance line while creating a large trough and two smaller troughs on either side. Traders would typically see the break of the neckline as a bullish scenario.  

Source: Admirals MetaTrader 5, DAX40, M5 - Data range: from 14 Sep 2022 to 18 Sep 2022. Captured on 18 Sep 2022. Please note: Past performance is not a reliable indicator of future performance. 

In this particular illustration, the price did break higher from the neckline but eventually broke back down below it. It’s worthwhile remembering that the lower the timeframe you analyse the more noise and false breakout patterns there will be.  

This is why when day trading patterns are on a lower timeframe, traders may filter out moves which are in line with the higher timeframe trend. This means trying to identify continuation or reversal patterns on a lower timeframe such as the 5-minute or 15-minute chart which is in line with the 1-hour or 4-hour chart trend.  

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For example, below is an illustration of a 15-minute chart bullish head and shoulders pattern on USDJPY.  

Source: Admirals MetaTrader 5, USDJPY, M15 - Data range: from 30 Aug 2022 to 1 Sep 2022. Captured on 18 Sep 2022. Please note: Past performance is not a reliable indicator of future performance. 

The 15-minute head and shoulders pattern shows a horizontal resistance line acting as a neckline with a large peak and two smaller peaks under the neckline.  

Traders could wait for the price to close above the neckline, wait for a new trend to develop above the neckline or try and trade it as it breaks through the neckline (very aggressive!).  

Stop losses could be placed at the most recent shoulder, which in the example above is the most recent swing higher low.  

Source: Admirals MetaTrader 5, USDJPY, H1 - Data range: from 16 Aug 2022 to 9 Sep 2022. Captured on 18 Sep 2022. Please note: Past performance is not a reliable indicator of future performance. 

One important difference to this day trading pattern example is that it has developed within an overall uptrend. 

The chart above highlights the 15-minute chart day trading pattern but on the 1-hour chart. As the overall trend has been higher, the lower time frame head and shoulders pattern becomes a higher probability.  

This is why using day trading patterns along with other technical tools, timeframes and analysis is key to identifying high-probability technical setups. 

Stay up to date with the latest strategies and market movements with the free-to-attend Admirals Live Trading Webinar series, hosted by experienced traders, 3 times a week.  

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How to Access ‘Featured Ideas’ to Identify Day Trading Patterns 

With Admirals, you can access Featured Ideas from the Premium Analytics section in the Trader’s Room once you open a live or demo trading account. This area shows you different technical analysis day trading patterns on the forex market using algorithms from Trading Central.  

Source: Premium Analytics, Featured Ideas, 27 Sep 2022 

Of course, these are merely technical analysis events so analysing the higher timeframes yourself or using other analytical tools such as fundamental analysis would be wise. However, this does serve as a great starting point to identify potential day trading patterns to analyse in more detail to identify high probability trading setups.  

As always, risk management will be the most important factor as trading is about winning and losing. You can experiment with the Premium Analytics section with a live or demo trading account yourself.  

A live account will offer full access whereas a demo account will allow you to try out a basic version to get started with.  

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FAQs on Day Trading Patterns  

What is the best pattern for day trading? 

The most commonly used patterns for day trading include head and shoulders, ascending and descending triangle patterns, pennants, flags and the cup and handle. However, what is the best pattern will depend on other market factors and research.  

INFORMATION ABOUT ANALYTICAL MATERIALS:  

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”). Before making any investment decisions please pay close attention to the following:  

1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.  

2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.  

3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.  

4. The Analysis is prepared by an independent analyst, Jitanchandra Solanki, (hereinafter “Author”) based on personal estimations.  

5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.  

6. Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.  

7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved. 

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