CLASS 7 Chart Patterns
CLASS 7 Chart Patterns
CLASS 7 Chart Patterns
CHART PATTERNS
Overall Goals:
Class Overview
Chart patterns are technical tools that signal to traders that the price of a
security is likely to move in one direction or to another when the pattern
is complete. The formation of a chart pattern is clearly an illustration of
the struggle between buyers and sellers.
-Existing trend
-Breakout stage
CLASSIFICATION OF CHART PATTERNS.
Bullish patterns, this will most likely be dependant on the trend of the
market and location the pattern is being formed.
Bearish patterns, this will most likely be dependent on the trend of the
market and location the pattern is being formed.
A triple top is a reversal pattern formed when price attempts to move past
a level of resistance three times and fails. Upon failure of the third attempt
the trend is thought to reverse and move in a downward trend.
Head and Shoulder top is a bearish reversal chart pattern that usually
appear following an upward price trend, this chart pattern appears with
a three-peak formation and with the centre peak taller than the others.
Price forms lower highs and higher lows following two sloping trend
lines that eventually intersect, the breakout is upward.
Flags and pennants are continuation patterns formed after a sharp price
movement. The move consolidates, forming a flag shape or pennant
shape, and suggests another strong move in the same direction of the
prior move upon completion.
A Pennant just like the flag can be bullish or bearish and they look like a
symmetrical triangle. Pennant are short triangle bounded by two
converging trend lines
Cup and handle as the name imply looks like a cup profile with the
handle on the right… it can be a reversal or a continuation pattern.
The best trading opportunity is generated when the price clears the top of
the Cup. A long trade is entered when the price closes above the high of
the cup.
Inverted cup and handle price action follows the shape of an inverted
cup followed by a handle. Price breaks out downward.
PRINCIPLES AND RULES TO USING CHART PATTERNS.
ASSIGNMENT.