In technical analysis, transition between raising and falling trends are often signaled by price patterns. Following are the different price patterns identified
Double top and Double bottom
Head & shoulder pattern and Cup Pattern
Flag & Rectangle Pattern
Triangle Pattern
Double top and Double Bottom
Identify two equivalent tops. The duration between two equivalent tops should be atleast one month. Volume should be high for the second top compared to first top. We can take short position. When to take short position is when the price goes below the previous bottom.
Identify two equivalent bottoms. The duration between two equivalent bottom should be at least 1 month. Volume should be high for the second bottom compared to first bottom. We can take long position. When to take long position is when the price goes above previous top.
Head and shoulder pattern
Identify shoulder head shoulder pattern. Head is the tallest one. Miinimum of three months of time. High volume at left shoulder and low volume at right shoulder. We can create short position when the price goes below the neck pattern.
Cup Pattern
It is for accumulation pattern. It takes longer duration to form. Cup pattern should be visible. Correlation of market should be low Lackluster volume should form the rounding pattern. Long position can be created when it is started to fill up
Flag Pattern
Flag has a pole and followed by rectangle pattern. Pole means a lot of buying has happened in a short span of time. Appears at early stage of the trend. Generally more visible in candlestick chart
Criteria.
Spot the steeper Trend. It slopes at 75-80% . Rectangular price pattern is expected. It should be with minimum of 3-7 days. Volume should be low.
