Price Patterns – Interpretation of Trend

In technical analysis, transitions between rising and falling trends are often signaled by price patterns. … When a price pattern signals a change in trend direction, it is known as a reversal pattern; a continuation pattern occurs when the trend continues in its existing direction following a brief pause.
Double, double bottom, Cup pattern, Flag pattern and triangle pattern are the price patterns. Double top and bottom analysis is used in technical analysis to explain movements in a security or other investment and can be used as part of a trading strategy to exploit recurring patterns. When a chart is plotted with the data and if we found there are two tops formed which are very much similar we can say a double top is formed, it will look like a Letter “M”. The twice touched high is considered as a resistance level. If the stock moves down again after touching the high which was previously formed then we can considered the trend is bearish. The double bottom pattern always follows a major or minor down trend in a particular security, and signals the reversal and the beginning of a potential uptrend. … and a noticeable expansion in volume is present coupled with fundamentals that indicate market conditions that are conducive to a reversal, a long position .When the daily price is plotted with line charts, there should be two visible equivalent bottoms with the duration of 1 month timeline with high volume in second bottom. Condition for bullish: Two equivalent bottoms with 1 month duration & high volume at the second bottom or the neck line and trend goes up .Flag pattern is one of the trend indicator in price pattern. A Perfect flat should meet the following conditions.