Price Patterns are formations which appear on commodity and stock charts which have shown to have a certain degree of predictive value. Some of the most common patterns include: Head & Shoulders (bearish), Inverse Head & Shoulders (bullish), Double Top (bearish), Double Bottom (bullish), Triangles, Flags and Pennants (can be bullish or bearish depending on the prevailing trend).

  • : The price patterns explains the demand and supply and also the nature and characteristic of the market with the entry and exit. some of the major price patterns are double top and bottom, cup pattern ,flag pattern, head and shoulder, triangle pattern etc.,
  • : Dow theory explains the movement of the trend with respect to demand and supply, whereas price patterns explains the nature and characteristics of the trend and also its significance.
  • : Double top is bearish reversal pattern. It made of two consecutive peak that are equivalent in size. Volume should be high in second peak. The minimum duration required to form double top is one month.
  • : Double bottom is a bullish trend pattern. Formation of two equivalent bottom in price movement is called double bottom. To confirm the trend, it should have high volume traded in the right bottom and the minimum duration between these two bottoms should be 20 days or more. Long positions can be considered above previous sellers zone.
  • : Head and shoulder is bearish trend . Its strong indication of distribution that’s happening in the market. There should be three peaks formed at a minimum duration of a month for each peak. The middle peak or head should be higher than the shoulders. During the left shoulder the volume traded should be high. We can take short position when it breaks the neck line of head and shoulder.
  • : The inverted head and shoulder is an accumulation pattern. The minimum duration to form each pattern (left shoulder, head and right shoulder) is one month. Volume should be high during the left shoulder formation. Long positions can be considered.
  • : CUP pattern is a passive accumulation pattern which require nearly one year to form Here the volume will be low at the round bottom More over at this stage the stock will not be market sensitive When the share moves with volume above the peak of the cup bull trend is conformed
  • : Flag pattern is similar to flag which shows bullish trend. conditions: The steeper pole should be formed and then the rectangular sideways movement should be noticed for 3-4days and break out should be made as BULLISH, at the same time the volume should be more in that day.
  • : Entry price: after the breakout Exit price: after the price movement has reversed its direction Stop loss: point where breakout gap is filled
  • : Triangle pattern is a bullish trend. The minimum duration to form a triangle is 1.5 months. The break out is expected at 70% zone of triangle. Volume required to confirm breakout.
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