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A support is a horizontal floor where buyers are buying in full swing and sellers are
not interested to sell any more.
Support is a point where demand is more than supply. Support puts an end to a
further down trend.
Support exists at a point where bulls are more aggressive than bears. Bears pull back
and buying grey zone gets created. This region is called Support Zone.
A resistance is a horizontal ceiling where sellers are selling in full swing and buyers are
not interested to buy any more.
Resistance are points where supply is more than demand. Resistance ends further up
trend.
Resistance exists at a point where bears are more aggressive than bulls. Bulls pull back
and selling grey zone gets created. This region is called Resistance Zone.
A H&S (Top) is a reversal pattern which marks the end of the up trend. The H&S pattern is
also called as reversal chart pattern as the trend changes from uptrend to downtrend.
H&S formed in Resistance zone (Top)
1. Left shoulder
2. Head
3. Right shoulder
When the price goes below neck line after the Right shoulder formation, it results
into downtrend becoming our SELL level.
Now in this case Support acting as Neckline becomes Resistance going forward in
future.
H&S formed in Support zone:
A H&S (Bottom) is a bottom up pattern which marks the end of the down trend. The H&S pattern
is also called as reversal chart pattern as the trend changes from downtrend to uptrend.
H&S formed in Support zone:
1. Left shoulder
2. Head
3. Right shoulder
When the price goes above the neck line after the Right shoulder formation, it results
into an uptrend becoming our BUY level.
Now in this case Resistance acting as Neckline becomes Support going forward in future.
DOUBLE TOP:
Two tops are formed almost of same level where sellers are in full command.
The two peaks formed need not be equal in price, but should be same in the area with a
minor reaction low between them.
If the price falls below the support line or bottom line of “M” it’s called breakdown
resulting in downtrend.
DOUBLE BOTTOM:
Two bottoms are formed almost of same level where buyers are in full command.
The two peaks formed need not be equal in price, but should be same in the area with a
minor reaction high between them.
If the price rises above the resistance line or upper part of “W” it’s called breakout
resulting in uptrend.
Rounded top & BOTTOM:
Apart from double top and double bottom there is one more formation called as rounded top or
rounded bottom which also results into trend reversal.
The flag pattern looks similar to Flag. It has a Pole and a rectangle attached at the end of it.
The rectangle is formed by two parallel trend lines that act as support and resistance for
the price until the price breaks out.
In general, the flag will not be perfectly flat but will have its trend lines sloping.
Falling wedge:
Rising wedge:
Falling Wedge: - The falling wedge is a generally bullish pattern signaling that one will likely see
the 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.
Rising Wedge: - Conversely, a rising wedge is a bearish pattern that signals that the security is
likely to head in a downward direction. The trend lines of this pattern converge, with both being
slanted in an upward direction as the price is trading in an uptrend.