CHART PATTERNS

Chart patterns provide a clear picture of every market buying and

selling activity.

Chart patterns frequently repeat themselves, which appeals to human

nature in general and trader psychology in particular.

You can acquire a significant competitive advantage in the markets if

you can discover how to spot these patterns early on.

Chart patterns offer a comprehensive visual record of every transaction

and a foundation for examining the conflict between bulls and bears.

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 TYPES OF CHART PATTERNS
CONTINUATION PATTERNS
These kind of chart patterns provide indications that the current trend will continue. Trends typically don't rise
or fall in a straight line. They pause and oscillate, "correct" lower or higher, and then gather steam to carry the
general trend forward.

REVERSAL PATERNS
Chart formations known as reversal patterns indicate that the current trend is set to reverse. When a reversal
chart pattern appears when the price is in an uptrend, it suggests that the trend will soon change and the
price will begin to decline.
BILATERAL PATTERNS
These types of chart patterns demonstrate the market's turbulence and extreme volatility. Because the price
can go in either direction, bilateral chart patterns are a little trickier to read and forecast.

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 Reversal Patterns
Head and Shoulders Pattern

A huge peak in the middle and smaller peaks on either side define this bullish
and bearish reversal pattern. One of the most trustworthy chart patterns for
reversals is the head and shoulders pattern. This pattern develops when a
stock's price increases to its peak and then declines to the point where it first
began to rise.

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 Double Top

Another common bearish reversal pattern used by traders is the double top. The price of the stock will
peak before descending to a level of support. It will then create another peak before turning away
from the current trend.
 Double Bottom By _warre.n._

The bullish reversal pattern known as a double bottom is the exact opposite of a double top. The price
of the stock will reach a peak before declining to a level of resistance. It will then create another peak
before turning away from the current trend.
 Wedges

Wedges, which are created by combining two trend lines that converge, are bullish and bearish reversal
patterns as well as continuation patterns.
Either a rising wedge or a falling wedge is possible. A rising wedge forms when the stock price increases
over time, whereas a falling wedge forms when the stock price decreases over time.
By connecting the peaks and troughs and drawing trend lines, wedge patterns can be created.
Following a price breakout, there is a sudden spike in the price in either direction.

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 CONTINUATION PATTERNS
Bearish rectangle
When the price is declining, the pattern appears, but for a while, it oscillates sideways and
shapes a rectangle, creating nearly equal highs and lows as seen in the image.

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 Bullish Rectangle
The pattern occurs while the price is rising, but for a while it oscillates sideways and creates
a rectangle, which I mean it makes about equal highs and lows as seen in the figure
above.

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Bullish Pennant

Depending on the circumstance, I either use the middle of the bottom line, the pattern's highest low,
or its lowest low as my stop loss while using this pattern. I typically choose between the lowest low and
the middle of the lower line because this pattern is small. We have four lows because the price in the
above image struck the bottom line four times. The first one is the pattern's lowest low, and the second
one is its highest low.

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Bearish Pennant By _warre.n._
Cup and Handle

The handle is in the right semicircle, while the cup is on the left. For the stop loss, the
handle's lowest point is used. To estimate the price objective for individuals looking to
enter a trade, the radius of the cup or handle is added to the point where the price
crosses over the horizontal line.

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Reverse Cup & Handle

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Bullish Symmetrical Triangle

Depending on the circumstance, I either use the middle of the bottom line, the pattern's highest
low, or a place in between these two as my stop loss while using this pattern. For the purpose of
clarification, let's use the example of the figure above where the highest low would be the third
time the price touched the pattern's lower line. This pattern resembles the bullish pennant in
appearance. I concur that they are rather similar. The primary distinction is that symmetrical
triangles are wider than pennant patterns.

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Bearish Symmetrical Triangle By _warre.n._
Bullish Ascending Triangle By _warre.n._

Keep in mind that the pattern's upper line is horizontal. Similar to how I discussed pennant
and symmetrical patterns, this pattern's stop loss is chosen with the same mindset.
Bearish Descending Triangle By _warre.n._
Bullish Flag
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When using this pattern, I select the flag's lowest price as my stop loss,
though I may use a different level depending on the circumstances.
Bearish Flag

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