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
