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Chart patterns, you might have heard this word most of the time in the stock market trading. Did you ever notice what traders are looking for on the chart? The answer will be the same that they are doing technical analysis of the stocks. Right. But what are the information that traders exactly studying at, as well as what they are looking for in the chart?
There are many information traders are looking for in the stock charts. Today we are going to tell you one of them. And it is the most important stuff while doing technical analysis of stock or to predicts the price movement of any stock.
Yes, we are going to tell you the 13 most powerful chart patterns that are used by every trader to earn money.
More article on technical analysis .
1. Ascending Triangle
The ascending triangle pattern is a bullish continuation pattern which means the continuation of the uptrend. Well, it can go either upside or downside. It depends on the breakout, but more chances are upside. It can be drawn onto the chart by placing a horizontal line on the upside swing highs(resistance) and a trend line to the swing lows(support).
2. Descending Triangle
The Descending Triangle pattern is a bearish continuation pattern that indicates the downtrend continuation. Most of the time it breaks the downside. It can be drawn onto the charts by placing a trend line on the swing lows(resistance) and a horizontal line on swing lows(support).
3. Symmetrical Triangle
The Symmetrical Triangle pattern can be either bullish or bearish continuation. It depends on the market, it is a continuation pattern. If it breaks its resistance then it goes upside. Also, if it breaks support then it goes downside. It can be drawn onto chart by placing a trendline on the swing lows(support) and swing highs(resistance)
4. Head and shoulder
The head and shoulder pattern is a very reliable pattern. The name indicates itself head and shoulder. There is a three-peak where the second peak is higher than the first and third peaks. If it breaks the neckline(support) then it goes into the downtrend.
5. Inverted Head and shoulder
Inverted Head and shoulder patterns are just opposite of head and shoulder pattern. There are the same three peaks the same as in the head and shoulder. The only difference is the second peak is lower than the first and third peaks. If it breaks its neckline(resistance)then a buy entry can be taken.
6. Double Top
A double top is one of the most used chart patterns among traders. In Double top, the price goes up, and then it shows some correction(neckline) and again it goes to the top. Now, if the price breaks the neckline then a sell entry can be taken.
7. Double Bottom
A double bottom is the same exactly a double top chart pattern. It is a mirror of a double top. When it breaks a neckline a buy entry can be taken.
8. falling Wedge
Falling wedge occurs during two down sloping level. In falling wedge the resistance is steeper than the support. It can either be bullish or bearish, it depend on the market.
9. Rising Wedge
Rising wedge is one of the popular chart patterns among traders. Because it is is very reliable. In rising wedge support line is steeper than resistance. Both rising wedge and falling wedge is a reversal pattern. But it also depends on the market.
10. Cup and handle
The cup and handle pattern is a bullish continuation pattern. It formed like a cup and handle. On the handle breakout a buy entry can be taken. Cup and handle pattern generally show the bullishness in the market.
Pennant can also be said as flag pattern.Flag pattern looks like a pole and a flag at upside. Pennants can be either bullish or bearish. it depends on the market and they represent a reversal or continuation pattern.
12. Bullish Rectangle
A Bullish rectangle patterns are continuation patterns that occur when a price pauses temporarily during an uptrend. They offers you a buying opportunity.
13. Bearish Rectangle
A Bearish rectangle pattern is a continuation pattern that occurs when a price pauses during a strong downtrend and work between a rectangle . They offers you a selling opportunity.
I hope this article helps you to know more about chart patterns.
If you want to give any suggestion/feedback, please make sure to tell me in the comment section.
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