Stock trading – “How to trade shares – Price patterns”

Price patterns

1. Double Top & Double bottom
2. Head and shoulder
3. Cup pattern
4. Flag pattern
5. Triangle pattern

Two equivalent tops located with minimum one month gap and the price falls below the previous lower bottom price its time to create a short position. Volume should be high on the second top to qualify for the double top pattern

Two equivalent bottoms located with minimum one month gap and the price increases above the previous higher top its time to create a long position. Volume should be high on the second bottom to qualify for the double bottom pattern

Head & shoulder distribution pattern takes place when the buyer sells in a short period of time. Stronger hands nature can be observed in this pattern. It takes months of time(min 3 months). High volume should take place at the lower shoulder. It is a bearish trend reversal signal(expected price to go down) & short position can be created if the price goes below the neck line

Cup pattern is for long term traders. Accumulation of stock happens in a cup pattern. It takes longer duration to form. Correlation of market movement should be low. Lackluster volume. Long position can be created one the cup starts getting filled

Flag pattern(Use candle stick) – Steeper pole with sideways movement(Min 3 to 7 days). Indicates lots of buy happening. Appears in the early stages of trend. Volume should be low during flag indicates no selling happening. Positive trend expected. Long position can be created

Triangle pattern min 45 days to form. Spot 5 waves. volume should be high during breakout. Break out can take place on any side(either positive or negative)