Price Patterns shows the characteristics behind the price movement.
Double Top & double bottom gives an early signal of the price movement.
When 2 equivalent Top and Bottom are identified over a 1 month period, look for high volume at the 2nd Top or Bottom and create a short while crossing neck.
Head & Shoulder is used to sell in a shorter period and it shows a bearish trend reversal. Explains that a strong hand is selling their stocks over months of time & needs 3 months to qualify. High volume at the left shoulder & low volume at the right shoulder shows the existence & exit of the strong hand seller.
Inverted H&S indicates opposite of the above.
Cup pattern shows accumulation over a long time. Cup should be visible with rounding bottom. Cup will have no correlation to market movement and decoupled from the market trend. Create Long position when cup gets filled. Ignore inverted cup. Buying is usually slow and not aggressive.
Flag pattern shows powerful characteristics at very early stage of the trend. Forms a steeper pole (75 to 80 deg). +ve pole shows Bullish trend and -ve shows bearish trend.
Cloth should be formed with sideways movement over 3 to 7 days and break out generally happens on the same side. Flag should not drift down. Volume should be lower.
Triangle pattern shows trend consolidation over min 45 days to qualify. Spot the wave A-B-C-D-E and connect the first two tops & first 2 bottoms and extend the line to firm a triangle. Breakout can happen any side. volume should be high indicating a fight between buyer & seller.
