Reversal Chart Patterns - Part 1

FX:EURUSD   Euro / U.S. Dollar
Double Top:
The double top is a reversal pattern of an upward trend in a stock's price. The double top marks an uptrend in the process of becoming a downtrend.

Sometimes called an "M" formation because of the pattern it creates on the chart, the double top is one of the most frequently seen and common of the patterns. Because they seem to be so easy to identify, the double top should be approached with caution by the investor.

Head and Shoulders:
The classic Head and Shoulders Top looks like a human head with shoulders on either side of the head. A perfect example of the pattern has three sharp high points, created by three successive rallies in the price of the financial instrument.

Volume is extremely important for this pattern!!

Rising Wedge:

A Continuation Wedge ( Bearish ) consists of two converging trend lines . The trend lines are slanted upward. Unlike the Triangles where the apex is pointed to the right, the apex of this pattern is slanted upwards at an angle. This is because prices edge steadily higher in a converging pattern i.e. there are higher highs and higher lows. A bearish signal occurs when prices break below the lower trendline .

Over the weeks or months that this pattern forms the trend appears upwards but the long-term range is still downward.
+1 Reply
This is nice stuff and yes, it does work because these are not random patterns, they are a reflection of trader behavior based on volumes and support and resistance levels. The only thing I would add is that the rising wedge diagram is a little misleading because it gives the impression that it starts from a bullish trend, whereas it is a bearish continuation pattern, as your notes correctly state.
Show me 100 real trades based on those patterns and the relative performance.
geoff questionario
Go do your own research. If you don't think it works, that's your right. I trade on my strategy and you trade on yours. Technical analysis is just one input that I factor into my trades and it's worked rather nicely for me for over 25 years. I have no interest in creating converts. If you don't like it and you're making money, then more power to you.
+1 Reply
I did my research so I can say it doesn't work. Over 25y the market can change a lot.
Natalie.Gin questionario
hahahahaa well, can you show me 100 trades that it didn't work?....
questionario Natalie.Gin
I'm not the one who is suggesting to use those patterns, so I don't have to show anything.
Natalie.Gin questionario
Please, do not use any of my charts....
I am not suggesting that its actually really bad...
Ripple753 Natalie.Gin
Are you in the education business or un-education business :)
+1 Reply
Natalie.Gin Ripple753
hahaha my only business is trading....
I don't teach, give signals manage funds or anything like that...
I am happy to show some of my trades and trading perspective....Free Of Charge!
But I am not suggesting anything!!!!!!!
My suggestion is not to trade...its a risky business!
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