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