Transitions between rising and falling trends are often signaled by price patterns.
DOUBLE TOP:
1. Two equivalent tops with a min gap of 1 month.
2. Volume should be high at the second top.
DOUBLE BOTTOM:
1. Two equivalent bottoms with a min gap of 1 month.
2. Volume should be high at the second bottom
HEAD AND SHOULDER:
1. In head and shoulder pattern three peaks are formed at a minimum duration of a month for each peak.(left shoulder,head,right shoulder)
2. left shoulder should have high volume.
3. head is the highest peak of other two.
4. right shoulder should have low volume.
CUP PATTERN: Cup pattern takes long(a year may be) time to form. The volume traded will be high during the early formation and during the rounding bottom, the volume will be as low as possible.
FLAG PATTERN : powerful pattern that appears very often.
*It should form a steep pole,
*rectangular price movements in 3 to 7 days time gap.
*Positive pole flag should give positive break out. Volume should be significantly high during break out.
TRIANGLE pattern is a powerful pattern which requires 45 days to form.
CONDITIONS: 1. The line chart pattern in the form of 5 waves(A-B-C-D-E) should construct a triangle while connecting the tops and bottoms with the duration of 45 days.
2. high volume during breakout.