Here is some Educational Chart Patterns that you should know in 2021.
Most of these patterns are seen daily in Stocks, Forex and different markets across the globe.
I hope you will find this information educational & informative.
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Head and Shoulders Pattern
A pattern is a chart formation that appears as a baseline with three peaks, the outside two are close in height and the middle is highest.
In , a pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.
An is similar to the standard pattern, but inverted: with the top used to predict reversals in downtrends
An pattern, upon completion, signals a bull market
Investors typically enter into a long position when the price rises above the resistance of the neckline.
Double Top (M) Pattern
A is an extremely technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs.
It is confirmed once the asset's price falls below a equal to the low between the two prior highs.
Double Bottom (W) Pattern
The looks like the letter "W". The twice-touched low is considered a .
The advance of the first bottom should be a drop of 10% to 20%, then the second bottom should form within 3% to 4% of the previous low, and on the ensuing advance should increase.
The pattern always follows a major or minor downtrend in a particular security, and signals the reversal and the beginning of a potential uptrend.
Tripple Top Pattern
A triple top is formed by three peaks moving into the same area, with pullbacks in between.
A triple top is considered complete, indicating a further price slide, once the price moves below pattern support.
A trader exits longs or enters shorts when the triple top completes.
If trading the pattern, a stop loss can be placed above resistance (peaks).
The estimated downside target for the pattern is the height of the pattern subtracted from the breakout point.
Triple Bottom Pattern
A triple bottom is a visual pattern that shows the buyers (bulls) taking control of the price action from the sellers (bears).
A triple bottom is generally seen as three roughly equal lows bouncing off support followed by the price action breaching resistance.
The formation of triple bottom is seen as an opportunity to enter a position.
When a security's price has been falling over time, a pattern can occur just as the trend makes its final downward move.
The drawn above the highs and below the lows on the price chart pattern can converge as the price slide loses momentum and buyers step in to slow the rate of decline.
Before the lines converge, price may breakout above the upper . When price breaks the upper the security is expected to reverse and trend higher.
Traders identifying reversal signals would want to look for trades that benefit from the security’s rise in price.
This usually occurs when a security’s price has been rising over time, but it can also occur in the midst of a downward trend as well.
The drawn above and below the price chart pattern can converge to help a trader or analyst anticipate a breakout reversal.
While price can be out of either , patterns have a tendency to break in the opposite direction from the .
Therefore, patterns indicate the more likely potential of falling prices after a breakout of the lower .
Traders can make trades after the breakout by selling the security short or using derivatives such as or options, depending on the security being charted.
These trades would seek to profit on the potential that prices will fall.
A , in , is a price chart characterized by a sharp countertrend (the flag) succeeding a short-lived trend (the flag pole).
Flag patterns are accompanied by representative indicators as well as price action.
Flag patterns signify trend reversals or breakouts after a period of consolidation.
are continuation patterns where a period of consolidation is followed by a breakout used in .
It's important to look at the in a pennant—the period of consolidation should have lower and the breakouts should occur on higher .
Most traders use in conjunction with other forms of that act as confirmation.
Consolidation is a term used to describe a stock's price movement within a given range for a period of time. It is generally caused due to trader indecisiveness.
Consolidated financial statements are used by analysts to evaluate parent and subsidiary companies as a single company.
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