![]() ![]() Then a breakout movement occurs in the same direction as the big stock move. This is followed by a period of consolidation that creates the pennant shape because of the converging lines. Pennants:Ī pennant pattern or a flag pattern is created when there is a sharp movement in the stock either upward or downward. Once there is price breakout, there is a sharp movement of prices in either of the directions.įor understanding Trading Strategies and the performance of stocks forming Falling Wedge patterns, Click Here. Wedge pattern can be drawn by using trend lines and connecting the peaks and the troughs. Rising wedge occurs when the price of the stock is rising over a time whereas falling wedge occurs when the price of the stock is falling over a time. It can be a rising wedge or a falling wedge. Wedges are bullish and bearish reversal as well as continuation patterns which are formed by joining two trend lines which converge. It is very similar to the cup and handle, but the only difference is that there is no handle to the pattern. It can take any time from several months to years to form. Rounding Bottom shows that the stock is reversing from a downward trend towards an upward trend.Īlso Read : Technical Analysis and Importance of Volume in Trading ![]() This pattern is also known as the “saucer bottom” and is long-term reversal chart pattern. The right-hand side of the pattern has low trading volume that may be as short as seven weeks or as long as 65 weeks. The cup appears similar to a rounding bottom chart pattern, and the handle is similar to a wedge pattern. Cup and Handle:Ī cup and handle is a bullish reversal chart pattern which resembles a cup and handle where the cup is in the shape of a “U” and the handle has a slight downward drift. It will then form a peak once more before reversing back from the prevailing trend. The stock price will form a peak and then retrace back to a level of resistance. Double Bottom:Ī double bottom is bullish reversal pattern that is totally opposite of double top. The stock price will form a peak and then retrace back to a level of support. Double top:Ī double top is another bearish reversal pattern that traders use a lot. When the prices break the baseline with volume then bearish reversal takes place.įor understanding Trading Strategies and the performance of stocks forming Bullish Head & Shoulder Pattern patterns, Click Here. Prices again rise to form a third peak, which is lower than the second peak and from here it starts declining to the base level. This pattern is formed when the prices of the stock rises to a peak and falls down to the same level from where it had started rising.Īgain the prices rises and form a peak higher than the last peak and again it declines to the original base. Head and shoulders pattern is considered to be one of the most reliable reversal chart patterns. This is a bullish and bearish reversal patterns which has a large peak in the middle and smaller peaks on the either sides. Here are the 10 most useful chats patterns which will help you in trading: 1.
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