10 · Foundations

Bearish Chart Patterns

Every tool in this book needs to work in both directions — down included.

These four patterns mirror the bullish setups you’ll find in Module Eleven. Learning both sides is what lets you trade whichever direction the market actually wants to go, instead of only ever looking for longs.

MRNA chart forming a descending triangle above flat support — MRNA — descending triangle. Highs stepping down into flat support. Each rally fails sooner than the last, which is sellers accepting worse prices to get out.

AVGO chart with a bear flag consolidating after a sharp decline — AVGO — bear flag. A sharp drop, then a drift higher on lighter volume. The drift is not a recovery; it is a pause.

AAPL chart forming a head and shoulders top with a neckline — AAPL — head and shoulders. Three peaks with the middle highest, and a neckline underneath. The pattern is not confirmed until the neckline gives way.

NVDA chart forming a double top at the same resistance level twice — NVDA — double top. Twice to the same level, twice rejected. The second failure says the buyers who showed up the first time are not there any more.

Descending Triangle

Falling swing highs meet a flat horizontal support line, compressing price into a triangle.

Entry: Short on a resistance rejection, or on a confirmed break below support.
Invalidation: Above the most recent lower high.
Target: The height of the triangle, projected from the breakdown point.

Bear Flag

A sharp vertical drop (“the pole”) is followed by a tight, upward-sloping consolidation channel — the flag.

Entry: Short on a confirmed break of the flag’s lower trendline.
Invalidation: Above the flag’s high.
Target: The length of the pole, projected from the breakdown point.

Head & Shoulders

Three peaks — a shoulder, a taller head, then a second shoulder roughly matching the first — with a neckline connecting the two troughs in between.

Entry: Short on a confirmed close below the neckline.
Invalidation: Above the right shoulder.
Target: The distance from the head to the neckline, projected from the breakdown point.

Double Top

Price makes a high, pulls back, then rallies to retest that same high a second time before reversing — forming an “M.”

Entry: Short on a rejection off the second high, or a confirmed break below the mid-pattern neckline.
Invalidation: Above the second high.
Target: The height of the M, projected from the breakdown point.