The Dow Theory helps identify trend and demand – supply zones. However they are slow in indicating the entry point for a trade. The price patterns, though are based on Dow Theory, can help identify the characteristic and strength of the trend.
Following price patterns can be found
Double Top – Double Bottom – These help identify trend reversal and neckline breakout/down is the entry point for the trade.
Head and Shoulder – This is a accumulation / distribution pattern and indicates reversal. The pattern forms over 3 months period.
Cup pattern – This is a accumulation pattern and lasts for longer period.
FLAG – This is a short pattern which involves a high momentum spike in stock (pole) followed by 3-7 days sideways movement in rectangular pattern. This pattern indicates movement in the same direction.
Triangle – This pattern can be used to spot a period of tussle between buyers – sellers after an initial movement in one direction. The pattern shows the tussle getting closer by passing day and breakout on either side of the triangle.
Hi,
Your Question 1 :: Stop loss point in triangle pattern? stop-loss should be placed behind most recent swing high (in a downtrend) or swing low (in an uptrend).
Thanks Naresh