This summary was referring about the pricing patterns and it’s study, also how it can be used effectively to study the trend.

  • A price pattern is a recognizable configuration of price movement that is identified using a series of trend lines and/or curves

  • Dow theory is an analysis for a longer period of 2 years,where as, the price patterns are like flag pattern and meant for a short period.

  • A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs.

  • Two equivalent bottoms with 1 month duration & high volume at the second bottom or the neck line and trend goes up above the neck line.

  • The first and third peaks are shoulders, and the second peak forms the head.

  • This pattern is identified when the price action of a security meets the following characteristics: the price falls to a trough and then rises; the price falls below the former trough and then rises again; finally, the price falls again but not as far as the second trough

  • The rounding bottom will be visible with cup shape and low volume in overall trend. Condition for bullish: Cub shape should be visible with line charts with longer duration. During the rounding bottom the volume should be low

  • A Perfect flat should meet the following conditions. It should have a steeper pole followed by sideways movement which is considered as body of the flag. Positive pole flag should give positive break out. Volume should be significantly high during break out.

  • Entry is the actual, breakout point.
    Stop loss is the price at the bottom of the flag.
    Exit is the price difference between the entry and stop loss

  • A triangle is a chart pattern, depicted by drawing trend lines along a converging price range, that connotes a pause in the prevailing trend.

    The conditions to qualify as perfect triangle are as below : – 1) There should be a 5 wave Corrective pattern to form a triangle shaped structure. 2) The triangle area should be minimum of 1.5 months. 3) The break out is expected at around 70% zone and volume is required to confirm the break out.

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