Price patterns provides the charateristics (Quality, Nature of trend) of price movement which can’t be obtained through Dow theory. It follows Dow theory but provides early signal. Double tops, double bottoms, flag pattern, triangle pattern, head and shoulder, cup patterns are different kinds of price patterns. Double top conditions are two equivalent tops with minimum duration of 20 days with good volume. If the volume is high and price is moving down the previous bottom, it is the bearish trend and we go for short. Double Bottom conditions are two equivalent bottoms with minimum duration of 20 days with good volume. If the Volume should be high after the second bottom, Price goes up above previous top shows bullish trend and we go for long position. Head & Shoulder is a price pattern showing accumulation and distribution in a short span say 3 months. If the share price moves with volume below the neckline then bearish trend is started. Cup pattern is accumulation type of price pattern ,stronger hands plays important role in this pattern ,it takes long duration and has a gradual movement in the prices. FLAG pattern is a steeper pole pattern with rectangular shaped sideways. It denotes momentum of higher buying in short time. When both buyers and sellers are aggressive triangle pattern is formed.

2 Comments
  1. MOHAN KUMAR R 5 years ago

    Nice detailed post.

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