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Presented by

ZONAIRA SARFRAZ
 Identifying chart patterns is simply a form of technical
analysis
 Research has proven that some chart patterns have high
forecasting probabilities.
 Investors use chart patterns to predict future stock
prices and market trends .
 Two types of chart pattern
Continuation.
Reversal.
 Head & Shoulder.
 Cup and Handle
 Double Top
 Wedges
 Double Bottom
 Triangles.
 Triple Top/Bottom
(Ascending, Descending &
 Broadening Top
Symmetric)
 Flags & Pennants.
 GAP Theory.

Reversal pattern Continuation pattern


Resembles an “M” in which
a stock’s price
 Rises to a peak and then
declines, then
 Rises above the former
peak and again
declines, and then
 Rises again but not the
second peak and again
declines

Formation Chart
 It is a bullish continuation pattern where an upward trend has
paused, but will continue when the pattern is confirmed.
 The ‘cup’ portion of the pattern should be a “U” shape that
resembles the rounding of a bowl rather than a “V” shape with
equal highs on both sides of the cup.
 The ‘handle’ forms on the right side of the cup .
 Once the handle is complete, the stock may breakout to new highs
and resume its trend higher.
 Appear on a chart in the  Appears on chart in the
shape of the letter "M" and shape of letter "W"
are quite common.  Forms at the bottom of the
 Forms in the uptrend. trend.
 Two consecutive peaks are  Two consecutive bottoms are
formed with same price level formed with the same price
 The breakdown will result in level.
the down trend reversal.  In the double bottom pattern,
a breakout will result in an
uptrend

Double Top Double BOTTOM


The triple top is a reversal pattern made up of three equal
highs followed by a break below support. In contrast to
the bottom
 It can be identified by a series of higher highs and lower lows.
 When connecting these highs and lows, the trend lines form a
widening pattern that looks like a megaphone or
reverse symmetrical triangle.
 Its formation usually has bearish implication .
 The falling wedge is a
generally bullish pattern
 It is formed when market
makes lower lows and lower
highs.
 Price break upwards through
the wedge and move into an
uptrend.
 The trend lines of this pattern
converge, with both being
slanted in a downward
direction as the price is
trading in a downtrend

Falling wedge Chart pattern


 Rising wedge is a bearish
pattern that signals that the
security is likely to head in a
downward direction.
 It is formed when market
makes higher highs and
higher lows.

 The trend lines of this pattern


converge, with both trend
lines slanted in an upward
direction

Rising wedge Chart pattern


 Ascending triangles are  The descending triangle is
generally considered bullish generally considered to be
and are most reliable when bearish and is usually found
found in an uptrend. in downtrends.
 The top part of the triangle  The top part of the triangle
appears flat, while the bottom has a downward slant and the
part of the triangle has an bottom is flat
upward slant

Ascending Triangle Descending Triangle


 Symmetrical triangles can be
characterized as areas of
indecision.
 A market pauses and future
direction is questioned.
 It is formed when market
make lower highs and higher
lows .
 when Price of stock is
moving in an upward
direction , and consolidates
sideways or retraces slightly,
and then continues in its
previous direction.
 Small rectangular pattern or
consolidation zone is formed
which is flag .
 In flag uptrend is pole
 Represent only brief pauses
in a dynamic market.

Flags Chart
 Identical to flag
 Consolidation phase of a
pennant pattern is
characterized by converging
trend lines rather than parallel
trend lines.
 symmetrical triangles.

Pennant Chart pattern


 An island reversal is short-term reversal pattern that forms with
two overlapping gaps
 Gap is an area on a price chart in which there were
no trades.
 Normally this occurs after the close of the market
on one day and the next day's open.
 Gap up and gap down
 Describe a gap in price ,  Gap appear in specific
occurs when the price action trading range or congestion
is breaking out of their area.
trading range or congestion
area.

Breakaway gaps Common Gaps


 Occurs at the end of a major  occur in the middle of trends.
trend and then reverses . In an uptrend and gives
signals of continuation