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Buying and Selling can take place considering the power of demand and supply.
If double top or head shoulder pattern appears, the short position can be created once the trend goes below the neckline. In the same case, when double bottom or inverted head and shoulder appears, the long position can be created once the trend goes above the neckline.
If flag/inverted appears, the long/ short position can be created after the breakout with high volume and only when the trend moves on the same direction.
If triangle is seen, the breakout can happen at any direction and the long/short can be placed based on whether it is bullish/bearish.
The cup pattern mainly happens for accumulation and once the cup pattern is identified, the long position can be created.
Price patterns is one the widely used technical analysis to identify the entry and exit point of the trade.
Listed below are buy and sell point for different types of price patterns : –
Double Top –> If A and B are the equivalent top and C is the resistance identified during the double top formation, then we can short sell as soon the downtrend from B breaches the Resistance level i.e, C.
Double Bottom –> If A and B are equivalent bottom and C is the support identified during the double bottom formation, then we can take long position as soon as the uptrend from B breaches the Support level i.e, C.
Head and Shoulder –> a) Wait for the complete formation of the pattern and short the position as soon as soon as the right shoulder breaks the Neckline.
b) In inverted Head and Shoulder create a long position as soon as the right shoulder breaks the Neckline.
Cup Pattern –> When the cup pattern is identified , we can create long position as soon as the break out happens above the price point of the two peaks in a cup.
Flag Pattern –> A Flag can be used as a continuation pattern, if a Bull flag is formed during the uptrend we can create a long position if it breaks out in the uptrend with significant volume.
Similarly in a Bear Flag during the downtrend we can create a short position if it breaks down in the downtrend with significant volume.
Triangle Pattern –> After forming the triangle pattern the stock usually breaks out at around 70% zone, If the break out is uptrend with significant volume create long position and if the break with significant volume create short position.
Buy: When there is a breakout, means when price goes higher than the previous top- long position
Sell: When the price goes below the previous low short position can be made.
It depends upon the pattern .
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