Stock chart patterns can be described as a way to view a sequence of price movements that occurred during stock trading periods. It can be for any time period – daily, weekly, daily and intra-day. Chart patterns are great because they can be repeated over and over again. This repetition appeals to both our human psychology and trader psychology. These patterns can be identified early and will give you a competitive edge in the markets. Stock chart patterns, like technical indicators like volume, support, resistance levels, RSI and Fibonacci Retracements, can be used to aid in technical analysis trading. They can also help identify trend reversals, patrones de trading or continuations.
What Stock Chart Patterns Should I Look For?
Print this article and have the patterns right at your fingertips whenever you need them. You have the answer at your fingertips! These chart patterns are important for traders and they are explained here. This will be a great resource for your trading. Having them around your desk every day will help you subconsciously recognize them when live trading occurs.
Pennant Chart Pattern
When there is significant stock movement, followed by consolidation, a pennant is formed. This is due to the converging lines. The breakout movement occurs in the direction of the stock’s big move. These patterns are similar to flag patterns and can last anywhere from one to three weeks. Volume will increase at the breakout.
Cup with Handle Chart Pattern
The handle pattern of a cup is what gives it its name. The handle is slightly sloped downwards and the cup has a curving u-shape. The right-hand side has a low trading volume and can last anywhere from seven to 65 weeks.
Triangle of Ascending Chart Pattern
The triangle is often seen during an upward trend, and it can be considered a continuation pattern. This is a bullish pattern. It can sometimes be part of a trend reversal, but it is more often a continuation. When they do occur, ascending triangles are bullish patterns.
Triple Bottom Chart Pattern
In technical analysis, the triple bottom pattern can be used to predict a reversal after a long downtrend. When the stock price experiences three distinct downward movements at the same price level before breaking out and reverse the trend, the triple bottom is achieved.
Descending Triangle Chart Pattern
Although the descending triangle can be considered a continuation pattern, it is also a bearish continuation pattern. It is often created during a downward trend as a continuation. It can sometimes be seen as an opposite to the ascending triangle pattern, but it is still considered a continuation.
Flag Chart Pattern
A rectangle is the flag stock chart pattern. The rectangle is formed by two trendlines that form support and resistance, until the price breaks free. The flag will have sloping trends lines and the slope should be in the opposite direction of the price movement. The buy signal is created when the price crosses the resistance or support lines.