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    Important Chart Patterns

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    pradeephd
    The document discusses various common chart patterns in technical analysis including triangles (ascending, descending, symmetrical), pennants, flags, wedges (rising, falling), double tops and bottoms, head and shoulders, and cup and handle patterns. It provides brief descriptions of each pattern including their shapes, trends, and whether they signify continuation of a trend or a reversal. These patterns can be used to predict potential support and resistance breakouts and changes in market direction.

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    Important Chart Patterns

    Uploaded by

    pradeephd
    1K views8 pages
    The document discusses various common chart patterns in technical analysis including triangles (ascending, descending, symmetrical), pennants, flags, wedges (rising, falling), double tops and bottoms, head and shoulders, and cup and handle patterns. It provides brief descriptions of each pattern including their shapes, trends, and whether they signify continuation of a trend or a reversal. These patterns can be used to predict potential support and resistance breakouts and changes in market direction.

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    Important chart patterns

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    The document discusses various common chart patterns in technical analysis including triangles (ascending, descending, symmetrical), pennants, flags, wedges (rising, falling), double tops and bottoms, head and shoulders, and cup and handle patterns. It provides brief descriptions of each pattern including their shapes, trends, and whether they signify continuation of a trend or a reversal. These patterns can be used to predict potential support and resistance breakouts and changes in market direction.

    Copyright:

    © All Rights Reserved
    Download as RTF, PDF, TXT or read online from Scribd
    Download as rtf, pdf, or txt
    1K views8 pages

    Important Chart Patterns

    Uploaded by

    pradeephd
    The document discusses various common chart patterns in technical analysis including triangles (ascending, descending, symmetrical), pennants, flags, wedges (rising, falling), double tops and bottoms, head and shoulders, and cup and handle patterns. It provides brief descriptions of each pattern including their shapes, trends, and whether they signify continuation of a trend or a reversal. These patterns can be used to predict potential support and resistance breakouts and changes in market direction.

    Copyright:

    © All Rights Reserved
    Download as RTF, PDF, TXT or read online from Scribd
    Download as rtf, pdf, or txt
    of 8

    1.

    Ascending triangle

    The ascending triangle is a bullish ‘continuation’ chart pattern that signifies a breakout is likely
    where the triangle lines converge. To draw this pattern, you need to place a horizontal line (the
    resistance line) on the resistance points and draw an ascending line (the uptrend line) along the
    support points.

    2. Descending triangle

    Unlike ascending triangles, the descending triangle represents a bearish market downtrend. The
    support line is horizontal, and the resistance line is descending, signifying the possibility of a
    downward breakout.
    3. Symmetrical triangle

    For symmetrical triangles, two trend lines start to meet which signifies a breakout in either
    direction. The support line is drawn with an upward trend, and the resistance line is drawn with a
    downward trend. Even though the breakout can happen in either direction, it often follows the
    general trend of the market.
    4. Pennant

    Pennants are represented by two lines that meet at a set point. They are often formed after strong
    upward or downward moves where traders pause and the price consolidates, before the trend
    continues in the same direction.

    5. Flag
    The flag stock chart pattern is shaped as a sloping rectangle, where the support and resistance
    lines run parallel until there is a breakout. The breakout is usually the opposite direction of the
    trendlines, meaning this is a reversal pattern. Learn more about breakout stock patterns.
    6. Wedge
    A wedge pattern represents a tightening price movement between the support and resistance
    lines, this can be either a rising wedge or a falling wedge. Unlike the triangle, the wedge doesn’t
    have a horizontal trend line and is characterised by either two upward trend lines or two
    downward trend lines.

    For a downward wedge, it is thought that the price will break through the resistance and for an
    upward wedge, the price is hypothesised to break through the support. This means the wedge is a
    reversal pattern as the breakout is opposite to the general trend.
    7. Double bottom

    A double bottom looks similar to the letter W and indicates when the price has made two
    unsuccessful attempts at breaking through the support level. It is a reversal chart pattern as it
    highlights a trend reversal. After unsuccessfully breaking through the support twice, the market
    price shifts towards an uptrend.

    8. Double top
    Opposite to a double bottom, a double top looks much like the letter M. The trend enters a
    reversal phase after failing to break through the resistance level twice. The trend then follows
    back to the support threshold and starts a downward trend breaking through the support line.

    Read more about trading with double top and bottom patterns.

    9. Head and shoulders


    The head and shoulders pattern tries to predict a bull to bear market reversal.
    Characterised by a large peak with two smaller peaks either side, all three levels fall back to the
    same support level. The trend is then likely to breakout in a downward motion.
    10. Rounding top or bottom

    A rounding bottom or cup usually indicates a bullish upward trend, whereas a rounding top
    usually indicates a bearish downward trend. Traders can buy at the middle of the U shape,
    capitalising on the trend that follows as it breaks through the resistance levels.
    11. Cup and handle
    The cup and handle is a well-known continuation stock chart pattern that signals a bullish
    market trend. It is the same as the above rounding bottom, but features a handle after the
    rounding bottom. The handle resembles a flag or pennant, and once completed, you can see the
    market breakout in a bullish upwards trend.

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