The pattern is said to have “broken out” once it has crossed either the support or resistance line. If the pattern broke out in the same direction as the preceding trend, it is called a continuation pattern. If the breakout is in the opposite direction, it is called a reversal pattern.
Chart patterns are well documented in technical analysis literature and are based on psychological phenomena that occur between the buyers and sellers of financial instruments in liquid markets.
For example, a pattern described as a Bullish Reversal Triangle would mean that it is a bullish signal, that is, the breakout was through the resistance line, upward. Because it is a reversal pattern that means the preceding trend was in the opposite direction as the breakout, that is, the preceding trend was bearish.
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