A Complete Guide For Stock Market Prediction By

Proper Technical Analysis

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[Book Title: Chart Pattern] by [Wealth Multiplier]

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Copyright © [ 2023 ] [ Wealth Multiplier ]

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Cover by [Digital economy].

E-Book Launch Date :- 1 / 1 / 2023

Paperback Launch Date :- 1 / 1 / 2023
Revised Edition 18 / 03 / 2023
 INDEX :-
Ascending Triangles
Symmetrical Triangle patter
Descending Triangle
Descending Triangle
Bump and Run Reversal
Cup And Handle Pattern
Double Bottom Pattern
Double Top Pattern
Falling Wedge Pattern
Flag Pattern
Pennant Pattern
Head and Shoulders Top Pattern
Inverse Head And Shoulders Pattern
Rounding Bottom Pattern
Price Channel Pattern

With Proper Diagrams , Chart patterns , Nature of

Pattern , Condition Of Breakout And Volume For
Stock Market Analysis And Prediction.
Ascending Triangles

The ascending triangle is a continuation pattern defined by an

entry point, stop loss and profit target. On a price chart, it
appears as a horizontal support line connecting the highs to
the lows from an upward trend line. Each ascending triangle
has at least two highs and two lows. In comparison, a
descending triangle has a horizontal lower line and a
descending upper trend line.
The above chart represents an ascending triangle. It consists of
a horizontal resistance line drawn at smaller highs, with a
rising trend line connecting minor lows, forming a triangular
pattern.
Ascending triangles are continuation patterns because the
price usually breaks out in the direction it was going before
the pattern. Like other types of triangles, volume often shrinks
during chart patterns. Investors usually enter when a price
breakout occurs, keeping an eye on false breakouts. The
positions they take depends on the direction of the breakout -
buy in the up direction and sell in the down direction. The
stop loss is placed just outside the triangle. To calculate the
profit target, traders take into account the height of the triangle
at the maximum width and adjust that measurement according
to the breakout price.

With ascending triangles, the wider the pattern, the higher the
risk/reward. For narrower patterns, the stop loss becomes
smaller; However, the profit target is still based on the most
important part of the pattern. In terms of the challenges faced
by traders using this chart, false breakouts are an important
consideration. Price movement can fluctuate, moving in and
out of the pattern in either direction if it fails to break the
upper resistance level.

Hedge funds and other institutional organizations can buy

hundreds of thousands of shares in a company. After the stock
has risen, and it has concluded that there are better
opportunities elsewhere, the organization will exit the
position. Here they have to sell their stock, but only up to a
certain point, in this example, we use $50. Since a large
amount of stock is being dumped in the market, the price of
that stock cannot climb above $50, because as soon as it does,
it will trigger a sale from the organization.
When word on the stock is out, other sellers jump on the
bandwagon and push the stock down even further. Once all
sellers are satisfied, buyers arrive, thinking that the stock is a
steal at this low price and overtook the shares, raising it even
higher than before.
Pattern Type: Continuity
Sign: Bullish
Breakout Confirmation: Confirmation of this pattern is near
the high of average trading volume.
Measurement: Subtract the height from the lowest low of the
pattern and then add to the breakout level.
Volume: Volume declines during an ascending triangle
formation, expands when a breakout occurs.

The ascending triangle pattern represents a high risk/reward

scenario, truncating other patterns that tend to narrow over
time. The biggest issue with this chart pattern is the potential
for false breakouts. As a result, the chart pattern can be
redrawn several times as price action crosses the resistance
level, but fails to sustain the breakout price. To learn more
about stock chart patterns and to fully take advantage of
technical analysis, be sure to check out our complete library
of predictable chart patterns. These include comprehensive
descriptions and images so that you can identify important
chart pattern scenarios and become a better trader.
Symmetrical Triangle pattern

The symmetrical triangle pattern is relatively easy to notice

because of its distinctive form. It is one of the three important
triangle patterns defined by classical technical analysis. The
other two are the descending triangle and the ascending
triangle.

A symmetrical triangle is a chart that can be identified by its

lower highs and higher lows. This pattern is indicated when
two trend lines converge with convergent trend lines
connecting multiple peaks and troughs.
Once one of those peaks "breaks out" of this barrier, it can
indicate a powerful bullish or bearish move that investors can
take advantage of if they know how to look for it. If the
breakout point appears at a trough point, it may indicate a
strong movement in bear territory and is an excellent sign that
it is time to exit. If the breakout point is extreme, it may
indicate a bull movement and a good time to invest.
Edwards and Maggie, authors of Technical Analysis of Stock
Trends, suggest that approximately 75% of symmetrical
triangles are continuation patterns and the rest mark reversals.
This indicates that we should not guess the direction of the
breakout, but instead be patient and wait for it to happen.
Additional analysis can also be applied to breakouts by
looking at gaps, volume and quick price movement. When
trading the symmetrical triangle, it is important to wait for
confirmation of the breakout to be on the right side.
These patterns have two or more swing highs and lows when it
comes to price, and investors need to be prepared to adjust to
trend lines with more "swings" to level the playing field. it
occurs. These types of patents can often mislead investors,
and they lose volume because they appear to be "purposeless,"
but for those who know how to look for breakouts, these
patterns can give a great indication of where to go. Know
when to buy it and when to go.
A settling triangle can be set up for a breakout which can be
calculated by taking the distance from the upper support line
and lower resistance at the beginning of the pattern and then
adding that to the breakout price point. For example, a settled
triangle may start at a price point of $40, then trade to $50
before the trading range narrows. So here, a breakout from the
$45 price point could result in a price target of $55 ($50 - $40
= $10 + $45 = $55).
The stop loss order should be placed slightly below the
breakout point for the symmetrical triangle pattern. For
example, if the stock begins to break out at above-average
volume at $45, investors should place their stop loss orders
slightly below the $45 price point.

Why are there symmetrical triangles

When supply and demand are out of balance, the stock's price
action will move forward. Either the bulls will overtake the
bears and push the stock higher, or the bears will overtake the
bulls and push the stock down—traders who can accurately
identify in which direction the symmetrical triangle will
condense the rewards of profit. .
Pattern Type: Continuation or Reversal
Indication: bullish or bearish
Breakout Confirmation: This pattern is confirmed above or
below the converging trend line at above average trading
volume.
Measurement: Subtract the high of the pattern's lowest low
and highest high and then add or subtract this amount at the
breakout level depending on how the breakout progresses.
Volume: Expanding on breakouts, volume declines throughout
the symmetrical triangle formation.
Be careful when trading symmetrical triangles, as traders can
be faked on bullish and bearish signals that reverse soon after
the trend begins. It is recommended to stop for a day after the
breakout to determine whether the pattern is real or not. Look
for one-day closing price targets below the trend line for a
bullish signal and above the trend line for a bearish signal. To
learn more about stock chart patterns and to fully take
advantage of technical analysis, be sure to check out our
complete library of predictable chart patterns. These include
comprehensive descriptions and images so that you can
identify important chart pattern scenarios and become a better
trader.
Descending Triangle

The descending triangle chart pattern, also known as the

descending triangle, allows traders to measure the distance
from the beginning of the pattern, represented by the highest
point, all the way to the flat support line. This type of
technical analysis identifies a downward trend, which will
eventually break through resistance levels causing price action
to drop.
Traders look for a descending triangle as the pattern indicates
that a breakdown is imminent. Usually, when there is a fall in
price, buyers push up the price even more. However, a
descending triangle indicates that buying pressure is lacking.
Here, sellers begin selling at even lower prices, which suggests
a series of lower highs. A breakdown usually occurs when
volumes are high, and the following move is rapid and severe.
Descending triangles are popular because they provide traders
with the opportunity to make substantial profits in the short
term. To trade the pattern, technical traders take a bear
position after a break of high volume. The price target is
usually equal to the entry point minus the vertical distance
between the lines drawn when the breakdown occurs. Stop
loss positions are taken on the upper trendline. To profit from
a descending triangle, traders must identify clear breakdowns
and avoid false signals. They also need to consider that in case
of no breakdown, the price may test the upper resistance
before moving to the lower support line again.
Descending triangles are the opposite of ascending triangles
because they have a horizontal upper trend line and a rising
lower. Reversals can also occur with descending triangles, but
they are generally considered to be bullish in nature. All
triangle patterns provide traders with the opportunity to short
the stock and set profit targets.
It is important to note that when trying to anticipate a potential
breakout, we also want to look at other technical indicators.
Simple moving averages help to confirm the signal to execute
the trend trade.
To help predict an upward breakout, when the price falls after
a broken triangle, we check to see if the price of the breakout
is above or below the 200-day simple moving average. The
trend outperforms an average of 5% when the breakout is
below the 200-day simple moving average.
To help predict a downward breakout, the opposite is true.
When the price breaks out above the 200-day simple moving
average, a broken triangle sees a price increase of 13%
compared to below the 200-day simple moving average.
Why is the descending triangle important?
The descending triangle is one of the most popular chart
patterns because it is easy to understand and clearly shows
demand, or lack thereof, in a stock. When the price falls
below the support level, it indicates that the stock is likely to
continue declining. This bearish pattern enables traders to
generate above
average returns over a short period of time. Descending
triangles can also indicate a reversal pattern or an uptrend, but
in most cases, they represent a bearish continuation pattern.
Pattern Type: Continuity
Hint: Bearish
Breakout Confirmation: Confirmation of this pattern is near
the low of average trading volume.
Measurement: Subtract the high from the high and low of the
pattern and then from the breakout level.
Volume: Volume declines during descending triangle
formation, expands on breakout
The descending triangle pattern can act as a great indicator of
a future trend, but it is not without its limitations. It is a
favorite among traders because the pattern is easy to
recognize, but it is known for false breakouts, so traders need
to manage their trades accordingly. To learn more about stock
chart patterns and to fully take advantage of technical
analysis, be sure to check out our complete library of
predictable chart patterns. These include comprehensive
descriptions and images so that you can identify important
chart pattern scenarios and become a better trader.
Bump and Run Reversal

The second phase of the pattern is the bump phase, in which

prices move up faster than the first phase. During this phase,
the trend line becomes at least 50% faster than the lead-in
trendline. Traders should validate the bump pattern by
checking the maximum-height of the bump in relation to the
lead-in trendline. The distance from the highest point of the
bump to the lead-in trendline should be twice (or more) the
distance from the highest height to the lead-in line in the
lead-in phase.
The chart starts showing the right side of the collision once the
prices reach their peak and start declining towards the trend
line. The volume expands after the advance forms on the left
side of the bump. The run phase begins when prices reach the
lead-in trendline.
After crossing the trendline, sometimes the price reverts back
to the trendline, which is now also a resistance level. Bump
and Run Reversal Patterns can be used for all types of trading
from daily, weekly to monthly, with the understanding that the
movement is volatile over the long term.
How does bump and run reversal happen?
The setup works like this; The stock is making an upward
sloping signal to investors that they should acquire the stock,
as the day progresses, investors keep bidding for the stock and
the price rises. Then an event occurs, such as
earnings, that causes traders to jump on the bandwagon and
bid for even more stocks. As momentum picks up, the price
moves up to form a new higher sloping trend line. However,
that is when things start going wrong.
Here supply catches up with demand, traders find that the
stock's bid has gone too high, and sellers come in and push
the stock down. During the lead-in phase the volume is often
initially high, and then the volume decreases until the onset of
the percussion, which then increases suddenly.
Pattern Type: Nondirectional
Hint: Bearish
Breakout Confirmation: Confirmation of this pattern is
below the lower trendline drawn at a low level during the
lead-in phase, with above-average trading volume.
Measuring: The price target is the lowest point in the lead-in phase
Volume: Volume is usually high at the beginning of the phase
and decreases throughout the pattern.
The Bump and Run Reversal Pattern is a high probability trade
that is being used by many professional traders. It can be
applied to any chart period, daily, weekly or monthly. The
pattern is an excellent indicator designed to identify
speculative demand that is likely to come to an end allowing
traders to profit on the stock. To learn more about stock chart
patterns and to fully take advantage of technical analysis, be
sure to check out our complete library of predictable chart
patterns. These include comprehensive descriptions and
images so that you can identify important chart pattern
scenarios and become a better trader.

Cup And Handle Pattern

A cup and handle pattern occurs when the underlying asset
forms a chart that resembles a cup in the shape of a U, and
represents a handle slightly downward after the cup.
Shape is formed when a price wave is down, followed by a
stabilization period, followed by a rally of roughly the same
size as the prior trend. This price action identity makes up the
cup and handle sizes.
The formation is usually initiated by low-trade volume,
followed by high volume as the left lip, declining volume at
the bottom of the cup, which then exits with increasing
volume towards the right lip and a breakout. This process can
last anywhere from a few minutes to sixty-five weeks,
beginning with a period of stabilization followed by
downward price volatility, then a rally that returns to nearly or
equal to the previous level before the price drops. brings.
Once this happens, the cup moves forward and forms a U, and
the price curves slightly downwards to form the handle.
The handle should be shorter than the cup and should only
point slightly down within the trading range - not less than a
third of what is in the cup. Investors who see a similar pattern
where the handle goes deep may want to try to avoid it.
However, when the handle is in the proper proportion to the
edge of the cup, a breakout that crosses the handle is a sign of
an increase in price. In addition, it is
important to note that this is not always the case, and investors
should use certain measures to minimize losses when
investing in these types of patterns.
The image above displays the standard cup and handle pattern.
To trade this formation correctly, a trader should place a stop
buy order slightly above the upper trendline that forms the
handle. This way, the buy order will be executed only if the
price breaks above the upper resistance level. This will avoid
jumping into a cup by entering a false breakout and handling
the pattern too early. For traders who want to add a little more
certainty to their trades, they should wait for the price handle
to close above the upper trend line.
Often traders try to buy a stock at a lower price, when it breaks
the upper trendline, hoping that the price will temporarily
move back down, but here they run the risk of moving the
price upwards, risking the trade. completely disappear.
The Cup and Handle pattern features a lower failure rate than
other chart patterns, which means it is a good indicator of
what is to come. The patterns were short handles that had a
higher success rate than patterns with longer handles. A
slightly higher upper left lip versus a right lip with a more
bottomless cupped pattern also has a higher success rate.
Pattern Type: Continuity
Sign: Bullish
Breakout confirmation: When there is above-average
volume, and the stock closes above the upper trendline drawn
from the top of the handle.
Measuring: The price target is achieved by measuring the
distance from the right lip to the bottom of the cup and then
connecting it to the price level of the right lip.
Volume: Increased volume is normal after cup sizing, with
volume as high as the left lip, decreasing volume at the
bottom of the cup, and increasing the volume towards the
right lip which continues on breakouts.
The cup and handle pattern was popularized by William
O'Neill, which has now expanded to all kinds of trading
scenarios. Traders refer to the cup and handle as a bullish
continuation pattern that is a highly accurate predictor of
sizable breakouts. To learn more about stock chart patterns
and to fully take advantage
of technical analysis, be sure to check out our complete library
of predictable chart patterns. These include comprehensive
descriptions and images so that you can identify important
chart pattern scenarios and become a better trader.
Double Bottom Pattern

When using technical analysis, the double bottom pattern

indicates a long-term or intermediate reversal in the overall
trend. It is defined by a drop in price in a stock or index that is
preceded by a rebound, then another decline at roughly the
same level as the first drop, followed by a more significant
rebound. The double bottom pattern resembles the look of a
W, where the low is considered a support level.
The prerequisite for a double bottom pattern is a significant
downward trend that continues over an extended period of
time - several months. The first bottom or trough of the trend
should be the lowest point of the current downward trend. The
first trough is followed by a 10 to 20% advance and,
occasionally, a drawn peak.
The second trough follows the advance and finds support from
the first lower. This formation can take weeks and months to
form. Two cisterns can be considered double bottom if the
difference between them is within the range of 3%.
Volume is the most important factor for the double bottom
pattern. Traders should ensure that buying pressure and
volume builds up during the second trough advance. Traders
should take note if volume is not down in the second leg of
this pattern as the stock or index is at risk of falling below the
current resistance level. When volume increases in the second
leg of the pattern, buyers finally rush in and push the stock up
through the confirmation point.

Double bottom reversal is completed when the trend breaks

the resistance from the highest point between the two
bottoms. Now resistance becomes support. This support is
sometimes tested with improvements first.

To set a target, a trader should consider the distance from the

resistance breakout to the lower points below and add those
values to the resistance breakout. With double bottom
patterns, it is a good idea to trade patterns that have at least
four weeks between lows.

Why is the double bottom pattern important?

When correctly identified, the double bottom pattern indicates
that an investor has an opportunity to enter the market with a
bullish trade as there is now significant support on the
downside, preventing the stock from falling below the
resistance level. And now one is setting up upwards. Step. As
soon as the double bottom pattern is identified, a trader can
initiate a well-timed bullish investment to make some quick
profits. However, if they are wrong about the movement and
the stock breaks the lower support level, they can quickly exit
for a small loss.
Pattern Type: Reversal
Sign: Bullish
Breakout Confirmation: Confirmation for this pattern is
above the horizontally drawn upper trendline between the
lows and the middle highs with above average volume.
Measuring: Take the distance between two lows and one high
and add it to the breakout level.
Volume: Volume decreases during formation and increases on
breakout.
The double bottom pattern is highly effective when identified
correctly. However, traders should keep a close eye on the
volume to ensure that it is rising throughout the pattern.
Therefore, it is important to ensure that all elements of the
pattern are correctly identified before jumping in and
executing a trade. To learn more about stock chart patterns
and to fully take advantage of technical analysis, be sure to
check out our complete library of predictable chart patterns.
These include comprehensive descriptions and images so that
you can identify important chart pattern scenarios and become
a better trader.
Double Top Pattern

The Double Top Pattern is a twin-peak chart pattern that

represents a bearish reversal in which the price reaches the
same level twice with a small drop between the two peaks. A
double top pattern usually signals an intermediate or
long-term change in trend. When identifying patterns, traders
need to understand that peaks and troughs do not need to form
an ideal M shape for the pattern to emerge.
Before the pattern emerges, there is a significant upward trend
for several months. The first top is the highest price the trend
has reached during the current trend. After the first top, there
is usually a 10 to 20% price bearish. This drop in asset value
is generally negligible; However, sometimes the decline can
be prolonged due to a decrease in demand.
The movement towards the second peak is usually a small
amount. Once the value reaches the first peak level, it opposes
an upward move. It may take 1-3 months for the price to reach
this level. A difference of 3% between the two heads is
generally acceptable. After the second peak, there should be
an increase in volume with a quick decline.
At this stage, the double top still needs to be confirmed. For
this purpose, the trend should break through the lowest point
between the two peaks with an increase in acceleration and
volume. To set a price target, traders must subtract the
distance from the breakpoint to the top of the break. If the gap
between the
peaks is too small, the pattern may not indicate a long-term
change in asset price.
Understanding the Double Top Pattern
Some argue that the hardest part of trading chart patterns is
recognizing them when they occur. Double tops make it easy,
but there are rules to help with the process. Otherwise, this
indicator may misinterpret fake outs or reversal trends.
Although there are variations, the classic double top pattern
marks a bullish bearish trend change. Multiple double top
patterns are likely to form throughout the chart, but unless an
important level of support is broken, the reversal pattern
cannot be confirmed and should not be acted upon.
The most important aspect of the double top pattern is to avoid
pulling the trigger too early on a trade. Any investor should
wait for the support level to break before jumping in. It is not
uncommon to apply a price or time filter to differentiate
between confirmed and false support breaks.
Pattern Type: Reversal
Hint: Bearish
Breakout Confirmation: This pattern is confirmed when
there is a close below the horizontally drawn lower trendline
in the middle of the middle of the high with above-average
volume.
Measurement: Take the distance between two of the
following highs, and then subtract that from the breakout
level.
Volume: Volume declines during formation, expands on breakout.
A double top reversal pattern is usually followed by a failed
move to the upside. This indicates that the market is unable to
break the upper resistance level. When the pattern occurs,
traders should avoid taking long positions; Instead the focus
should be on finding a bearish entry point. To learn more about
stock chart patterns and to fully take advantage of technical
analysis, be sure to check out our complete library of
predictable chart patterns. These include comprehensive
descriptions and images so that you can identify important
chart pattern scenarios and become a better trader.
Falling Wedge Pattern

A falling wedge pattern is a bullish pattern that starts widening

from the top and continues to shrink as the price declines.
Like rising wedges, trading falling wedges is one of the more
challenging chart patterns to trade. A falling wedge pattern
indicates continuation or reversal depending on the prevailing
trend. However, in most cases, the pattern indicates a reversal.
In terms of its appearance, the pattern is widest at the top and
narrows as it moves downwards with tighter price action.
In an ideal scenario, an extended downward trend with a fixed
bottom should be preceded by a wedge. This decline should
be maintained for at least 3 months. It usually takes a quarter
to half a year for the wedge pattern to form. The upper trend
line must have at least two high points and the second point
must be lower than the previous and so on. Similarly, there
must be at least two lows, each lower than the previous one.
Resistance and support should converge as the pattern
continues to develop. A change in lows indicates a decline in
selling pressure, and it forms a support line with a smaller
slope than the resistance line. The pattern is confirmed when
resistance is strongly broken. In some cases, traders should
wait for the previous high to break through.
Another important factor in pattern confirmation is volume. If
there is no expansion in volume, the breakout will not be
convincing. A falling wedge is not an easy pattern to trade as
it is difficult to identify.
When a stock or index price move falls over time, it can form
a wedge pattern as the chart begins to converge on a
downward path. Investors can look at the beginning of a
descending wedge pattern and measure the peak-to-trough
distance between support and resistance to see the pattern. As
the price continues to decline and loses momentum, buyers
begin to step in and slow down the rate of decline. Once the
trend lines converge, this is where the price breaks through
the trendline and moves upward.
A falling wedge indicates a bullish reversal pattern in the
price. It has three general characteristics that traders should
look for: First, it has convergent trendlines. Thereafter, a
pattern has declining volume as the trendline progresses.
Finally, it will be preceded by a breakout through the upper
trendline. Should all these things come together, you have a
falling wedge pattern, and a breakout to the upside should be
anticipated.

The descending wedge pattern, as well as the rising wedge

pattern, converges into smaller price channels. This means
that the distance between where a trader will enter a trade and
the price where they will open a stop loss order is relatively
tight. Here it can be relatively easy to exit the trade for
minimal loss, but if the stock moves to the trader's advantage,
it can result in excellent returns.
Pattern Type: Reversal and Continuation Patterns
Sign: Bullish
Breakout Confirmation: The confirmation for this pattern is
above the upper trend line drawn at a higher level with
volume above the average.
Measurement: The project target for the falling wedge pattern
is the highest high at the beginning of the price formation.
Volume: Volume decreases during formation and increases on
breakout.
A falling wedge pattern can be an excellent tool for identifying
market reversals. Here traders can use technical analysis to
combine lower lows and lower highs to form a lower wedge
pattern. In addition, the trader must meet certain conditions before
they can act. These include understanding the volume indicator to
see if the volume has increased when it goes up. Once the
requirements are met, and resistance is a close above the trendline,
it signals traders looking for a bullish entry point into the market.
To learn more about stock chart patterns and to fully take
advantage of technical analysis, be sure to
check out our complete library of predictable chart patterns.
These include comprehensive descriptions and images so that
you can identify important chart pattern scenarios and become
a better trader.
Flag Pattern

Flag patterns are similar to pennant patterns but are often

smaller. This technical analysis tool provides traders with the
advantage of low risk investments associated with quick
profits. Flags appear throughout the price highway, you find
them in fast moving environments where the stock or index
moves several points over a few days, then the price stops at
the flag and then continues to move in the same direction. . Of
course, eventually, the price reverses directions, so it's
important to hold the flag at the right point.
Like the pennant, the flag pattern is based on the market price
consolidation of a particular stock. The consolidation will
have a narrow range and will only be followed by a quick
upward move. Like the pennant, this pattern has a flag "pole",
which may represent a vertical price movement. These
fluctuations can be bearish or bullish, and can give an investor
a huge advantage if you know how to spot these patterns.

For bullish patterns, the start will start with a sudden spike that
can take many investors by surprise and cause a volume
frenzy as many are trying to buy before and during an
investment wave. After a while, the price will peak and
reverse slightly, giving the appearance of an inclined rectangle.
A breakout occurs when the resistance trend line is broken
when prices begin to rise again and then another breakout
occurs as an explosive price shift as the accelerated trend
continues upward.

The bearish pattern is simply the reverse of the flag pattern,

indicating a panic price decline with an almost vertical initial
decline. This time, when the trend line breaks, it will induce
panic selling to bring another downward-pointing leg into the
pattern. In terms of how sharp the decline is on the flag, it is
also an indicator of how bearish the pattern will be, and a
wise investor will act accordingly.
Understanding the Flag Pattern
Flags are short-term technical analysis that typically last less
than 21 days. In many cases, the formation may take only 3 to
4 days, appearing as a horizontal rectangle, then out of
nowhere to quickly move up. Reliable flags appear during
fast, quick price action. Patterns can be up or down, but prices
tend to rise or fall very quickly, moving at many points over a
short period of time. Volume also usually decreases during
formation but is not always the case.
If you think you have seen a flag to trade, the most important
factor is the increasingly bullish price trend. If the price action
is slowly moving up and down in the form of a flag, then it is
better for you to look elsewhere.
Pattern Type: Continuity
Sign: Bullish
Confirmation of Breakout: This pattern is confirmed when
the stock or index closes above a higher trendline with
above-average volume.
Measurement: Take the distance between the last steep move
in the flag, and then add that amount to the breakout.
Volume: Volume declines during formation, expands on breakout.
Flag patterns and technical analysis are used to identify a
possible continuation of a previous trend when the price
moves against the same trend. When the trend resumes, the
price move should accelerate, making the trade more
profitable, taking into account the flag pattern, and this is a
breakout. To learn more about stock chart patterns and to fully
take advantage of technical analysis, be sure to check out our
complete library of predictable chart patterns. These include
comprehensive descriptions and images so that you can
identify important chart pattern scenarios and become a better
trader.
Pennant Pattern

Traders pay close attention to pennants and flags while

trading. The two are very similar in terms of structure, and it
may take some practice before an investor can easily tell the
difference between the two. These short-term patterns that last
only two to three weeks in length may be indicated by an
initial significant volume move followed by a tapered off
period. Then there is a break out and finally another strong
volume move.
Investors can use this pattern to help gauge how high a stock
will be by taking the price below the "flag pole" in the initial
pattern, then waiting until the price consolidates. Once
consolidated, the stock or index will break out at a slightly
higher level, and if you take the bottom price and add it to the
break out price, it will give an excellent indication of future
price action for the pattern.
For example, if you have a stock that was priced at $10 based
on a "flag pole" and went aggressive to $20, then consolidated
to $18.50, where it stood briefly before breaking out at
$19.00. sits for. Investors can find an estimated top for this
pattern by taking an initial $10 and adding it to $19.00, which
gives a target of $29.00 to hit for the price on this stock for
this particular pattern. Typically, investors will use this pattern
in conjunction with other indicators to increase their chances
at an accurate forecast.
Most traders do not use pennants on their own, but combine
them with other technical analysis indicators so that they are
not faked or duped into making bad trades.
Pennants are short-term technical analysis that typically last
less than 21 days. In many cases, formation may take only 3
to 4 days. Anything that takes longer than 21 days is classified
as a symmetrical triangle or a falling wedge.
To identify the Ensign pattern, look for a fast, fast acting price
action leading up to the pattern. This feature is important
because it helps to make the pendant easier. Fixed price
direction can be up or down but in the short term many points
need to be moved.

Pattern Type: Continuity

Indication: bearish or bearish
Breakout Confirmation: This pattern is confirmed when there
is a close above the upper trendline drawn on a high for a
bullish pennant below the lower trendline for a bearish
pennant with above-average volume.
Measurement: Take the distance between the last steep move
in the pennant, and then add it to the breakout level.
Volume: Volume declines during formation, expands on breakout.

The top performing pennants are those with breakouts near

annual lows. Many traders use pennants in conjunction with
other chart patterns or technical indicators that act as
additional confirmations. For example, the relative strength
index (RSI) and balance volume pair well with pennants to
establish oversold levels during the consolidation phase,
which can be used to predict run-ups or breakouts in a stock
or index. can be done for. To learn more about stock chart
patterns and to fully take advantage of technical analysis, be
sure to check out our complete library of predictable chart
patterns. These include comprehensive descriptions and
images so that you can identify important chart pattern
scenarios and become a better trader.
Head and Shoulders Top Pattern

A head and shoulders top pattern is one that has three peaks
and looks like a head and shoulders because the two outer
peaks are similar in height, yet smaller than the middle peak.
This pattern is typically associated with a bullish bearish trend
and thus is considered very reliable in its ability to predict
stock action. This pattern is one of several top-notch patterns
used to predict the end of a bull market and the beginning of a
bearish one.
This head and shoulders top pattern occurs when a stock
climbs to its peak and then falls back to the point before the
uptrend. Then the stock will move upward once again, but this
time it will cross the previous spike and is called the "nose",
and then it will once again move upwards downwards. Once
again, there will be an upward tick that reaches the same level
on the first spike and then drops downward. This last
downward tick is usually significant as it is at this point where
the bulls turn to the bears.
If you become very good at reading this pattern, you can
immediately see the gains an investor can make. Selling your
stock at the point where the "nose" has reached its peak would
be an excellent idea, especially if you bought your stock at
one of those points based on the pattern. Buying below, then
waiting for the "heads" to appear, will give you the
opportunity to profit from this market trend before it turns
bear. This will give you a significant advantage over other
investors who may not be able to predict the downturn in the
times to come.

The head and shoulders top pattern is formed when the price
of a stock or index peaks and then suddenly reverts based on
the previous move. It will then rise above the former summit
to form the head, and then return to base level once again.
Then, in a final move, the stock or index will rise again, but
only to the level of the first peak of the formation, which is
where it will last travel back up to the baseline.
Is there a support break here which indicates a renewed desire
to sell the stock or index at lower prices? This decrease in
price indicates an increase in supply with an increase in
quantity. This fierce combination can trigger a powerful
downward move that eliminates any chances of the stock
returning to the previous support level.
Pattern Type: Reversal
Hint: Bearish
Breakout Confirmation: This pattern is confirmed when
there is a close below a horizontally drawn lower trendline at
an intermediate low with above-average volume.
Measuring: Take the distance from the top of the head to the
bottom half, then subtract that amount from the neckline at
the breakout.
Volume: Volume increases during the initial shoulder upward
formation, then decreases as price exits the left shoulder.
Volume will then balance out during the formation of the
head, only to rise again as price breaks below the bottom
support level.
The head and shoulders top pattern is one of the most
recognizable technical charts. The left and right shoulders
should be roughly the same height and width, but they may be
slightly staggered. It is important to understand that the
pattern is followed by an uptrend and usually a significant
reversal in a stock or index. To confirm that pattern it is
necessary to identify the neckline and volume at the break. To
learn more about stock chart patterns and to fully take
advantage of technical analysis, be sure to check out our
complete library of predictable chart patterns. These include
comprehensive descriptions and images so that you can
identify important chart pattern scenarios and become a better
trader.
 Inverse Head And Shoulders Pattern

The inverted head and shoulders pattern indicates a movement

towards a bullish trend and is an excellent indicator for traders
who know how to spot the pattern, allowing them to capitalize
on a bullish trade. . Similar to "triple bottom", the only
exception is that the "head" is lower than the other two points,
making this inverted head a shoulder.
The pattern can be recognized when the price of a stock falls
into a trough and then rises, then falls below the most recent
trough, and then rises again. Eventually, the price falls back
but not as deep as last time. Once the last trough is formed,
the price action moves upwards towards the resistance level
and breaks out.
This pattern is just the opposite, with the traditional reversal
head and shoulders pattern indicating a move to the bearish
zone. However, this pattern may also tell you some things you
want to know that it doesn't have an equivalent. For example,
this pattern can indicate how strong a bullish run will be if you
read it correctly.
If you look at the chart stretch coming before the formation of
the head and shoulders pattern, a long stretch could be a sign
of a strong bull movement, while a short one could mean that
you have to move before the bulls return.
Must get in and out quickly. , Furthermore, if the lead in the
head and shoulders pattern is abrupt, it could also indicate a
more definite bullish trend.
A head and shoulders pattern with a downward-facing
neckline can also indicate a better performance than one
without this movement. In addition, if the "left shoulder" of
the pattern is high, it may also mean that the pattern will
perform better than those with a high "right shoulder".
When executing the inverse head and shoulders pattern, stop
loss orders should be placed slightly below the neckline in
anticipation of a breakout. Those looking to trade more
aggressively can place their stop loss orders below the right
shoulders of the inverse head and shoulders pattern.
Traders should be wary of this pattern as, after the initial
decline, when the first shoulder is formed, bears will enter the
market and try to push the stock price down even further. If
they succeed, they may continue to hold their control, forcing
an extended downtrend.
The first and third kundas are considered as inverted shoulders,
while the second is considered as inverted heads. Traders who
identify the pattern enter a bull position when the price moves
above the upper resistance level, which is followed by the
right inverted shoulder. Once the Stocker Index moves above
this level, it indicates a bullish move. An increase in volume
also confirms the breakout.
How long the bull run will last can be determined by
measuring the distance between the bottom of the head and the
neckline, the same distance as when the stock or index moves
up on a breakout.
Pattern Type: Reversal
Sign: Bullish
Breakout Confirmation: This pattern is confirmed above the
upper trendline with above average volume.
Measurement: Take the distance between the first high and
low of the head and then add it to the upper resistance level
on the breakout.
Volume: Volume has a tendency to increase, causing a
shoulder downward movement first, then falling as prices rise.
Volume is balanced out during the
formation of the head and rises when price breaks above the
resistance level on the other shoulder.
The inverted head and shoulders is one of the most familiar
charts in technical analysis. It is a favorite among many
traders because of its strong and firm signals. However, one
should be cautious and wait for a confirmation, a breakout
above the neckline, before executing a bullish trade. It is also
always recommended to get additional confirmation from
other technical techniques. To learn more about stock chart
patterns and to fully take advantage of technical analysis, be
sure to check out our complete library of predictable chart
patterns. These include comprehensive descriptions and
images so that you can identify important chart pattern
scenarios and become a better trader.

Rounding Bottom Pattern

Rounding bottom patterns sometimes referred to as "saucer

bottom" patterns are known to be able to predict a longer term
uptrend. Similar to the cup and handle pattern, only without
the hassle of a temporary downward trend that creates a
"handle". The pattern is a long-term reversal pattern that is
best applied to a weekly chart representing a consolidation. It
changes from bearish to bullish.
This circular bottom pattern can be seen at the end of a
disappointingly long downward trend. The time frame for this
pattern can be weeks, months, or even years in length and is
considered one of the more rare patterns to form in the
market. Most of the time, this pattern indicates that a
prolonged downward trend, often caused by oversupply of
stocks, is coming to an end as investors begin buying at lower
price points, reversing the downward movement. . Once this is
triggered, it generally increases demand and drives up the
price of the stock.
This allows the stock to "break out" and initiate a long-lasting
and positive reversal that investors can take advantage of if
they choose to be one of those people who buy short and hold
onto the stock for some time. Willing to sit till it pops up
again. This is because the length of time for recovery can vary,
and it can take a long time to find its peak. Investors should be
prepared for this long period and should be patient till the
price rises.
The rounded bottom pattern looks similar to the cup and
handle pattern, but without the brief downward trends
represented by the handle. An initial drop of a round bottom
indicates that there is too much supply coming into the market,
which pushes the stock or index down. Here traders begin to
realize that the stock is trading at a discount, and buyers start
entering the market at the discounted price. This increase in
demand then pushes the stock higher as demand continues to
increase.
As the rounding bottom completes its formation, the stock
breaks out of a full bullish pattern. The whole process is
indicative of a shift from bearish to bullish in the sediment by
investors, which increases the momentum upward. Although
the pattern has a high success rate, it is quite rare compared to
other technical analysis charts.
Pattern Type: Continuity
Sign: Bullish
Breakout confirmation: When there is above-average
volume, and the stock closes above the lip of the rounding
bottom.
Measuring: The price target is achieved by measuring the
distance between the highest high and the lowest low and then
adding it to the breakout level.
Volume: The rounded bottom shape has an increase in
volume, balanced during the middle, with volume increasing
to the right, which continues on the breakout.
The rounded bottom pattern, which is given by the visual
resemblance to what looks like a bowl. It represents a gradual
price shift by investors from bearish to bullish. The pattern is
best confirmed by volume, which confirms a rounding bottom
by high volume during a decline, then flat volume during the
mid range, and again high volume when the price rises.
Traders were able to successfully identify the rounding
bottom should they expect an upward price action equal to the
size of the pattern. To learn more about stock chart patterns
and to fully take advantage of technical analysis, be sure to
check out our complete library of predictable chart patterns.
These include comprehensive descriptions and images so that
you can identify important chart pattern scenarios and become
a better trader.
Price Channel Pattern (प्राइस चैनल चार्ट)

Used by traders for technical analysis-based trading, a price

channel is a continuation pattern in which price bounces
between parallel resistance and support lines. Resistance and
support lines can move horizontally, downward (bearish) or
upward (bullish). One of the best things about the price
channel pattern is that it doesn't matter whether you are
looking at the daily chart or if you are a long term trader, this
chart pattern works with any trading time frame.

The first line drawn in a price channel chart is called the main
trend line. To illustrate this line, an analyst should identify
that there should be two lows in the case of a bullish price
channel, and two highs in the case of a bearish price channel.
The second line drawn in the chart pattern is called the channel
line.
 The channel line requires a higher or lower, the amount of
which depends on the analyst - some use two points while
others use only one as price movement moves through the
trading channel.

In the case of a bearish price channel, the trend remains

bearish if the price moves down while staying within the
descending channel lines. Signs of a change in direction
include price not meeting support levels. If the price follows
the first signal with a move above the resistance, it is another
sign of a change. If the price breaks the support, traders can
expect a sharp drop in the price.

The bullish channel is the opposite of the bearish channel.

Here the trendline moves through the ascending channels
while the price action remains within the channel resistance
levels. If the price does not reach the resistance and breaks
below the support then the trend may change. Similarly, a
break above resistance is considered bullish. Price channel
analysis is a flexible approach to trading because the
placement of the two trend lines is up to the trader - they may
prefer the exact price and line connection or tolerate margin.
Horizontal channels also exist but are more challenging for
traders who are not actively looking for them. A horizontal
channel tends to move sideways in a rectangular formation.
Buying and seller pressure strikes an equilibrium that forces
price movement sideways through parallel lines. A new high in
the price above the upper resistance level represents a buying
opportunity. A new low in the price below the lower support
level represents a technical sell signal.
A stock or security travels through a price channel when the
underlying price is buffered by the forces of supply and
demand, which can be downward, upward or sideways. The
culmination of all these factors pushes the price movement
into a tunnel-like trending movement. When there is excess
supply, the price channel moves downward, when there is
excess demand, the price channel moves upward, and if there
is an equal balance of supply and demand, the price channel
moves sideways Is.
Traders typically look for stocks that trade within a price
channel. When the stock is trading at the upper end of the
price channel, it indicates that the stock will likely trade back
to the center, and when the stock is trading at the lower end of
the price channel, it suggests that the stock will be trending.
The probability is higher.
Price channels are also useful when identifying stocks that are
about to break out, which is when a stock breaks an upper or
lower trendline. If the price action breaks above the upper
trend line, it is likely that the stock will have an upside
breakout. If the stock breaks the lower trendline, traders expect
a downside move.
A trader can see a price channel pattern if they can see at least
two higher highs and higher lows. The trader then draws a
line connecting the high and low to form a price channel
pattern.
No matter which price channel you are dealing with, once you
notice two highs that fail to reach the top of the price channel
pattern, the price will soon break down. Similarly, once you
see two lows that fail to reach the bottom of the price
channel pattern, the price is likely to break out of the upside.
The larger the gap between the price breaks in the resistance
line, the more likely the trade is to be established.
Once the price breaks through one of the horizontal channels,
the breakout is confirmed. One of the worst mistakes a trader
can make is to enter a trade before price has entered one of
the channel lines. Entering a trade too early can cause the
price to return within the channel, so it is always necessary to
wait for the breakout to be confirmed and for a break above an
upper resistance level or a break below a lower support level.
Pattern Type: Continuation or Reversal
Indication: bullish or bearish
Breakout Confirmation: This pattern is confirmed when the
stock or index closes higher above the upper trendline or
breaks below the lower trendline with above-average volume.
Measurement: middle of the last steep move Take the
distance to the last push before the breakout, and then add that
amount to the breakout.
Volume: Volume declines and rises during formation, but will
expand upon breakout.

The price channel tells traders where a stock or index is likely

to bounce around within a specific trading range. Once it
breaks the upper or lower trendline, a breakout of the
underlying is expected. On the upside, intense buying pressure
will prompt the stock to gain higher highs, while a breach on
the downside will show weakness, pushing the stock lower.
Understanding the price channel allows analysts to determine
which major forces are likely to win, increase selling pressure,
or buy pressure. To learn more about stock chart patterns and
to fully take advantage of technical analysis, be sure to check
out our complete library of predictable chart patterns. These
include comprehensive descriptions and images so that you
can identify important chart pattern scenarios and become a
better trader.