price patterns are important to determine the price action of the market trend and the important price patterns we must look out for is flag and triangle and even double top-bottom

  • : n technical analysis, transitions between rising and falling trends are often signaled by price patterns.The most commonly used price patterns are :-double top-bottom,head and shoulder,cup pattern, flag and triangle
  • : Dow theory is based on the market movement and not the price actions.So different analysts started criticising dow theory , hence a seperate part know as price patterns was formed to determine the price action also.
  • : when there are two equivalent tops it is called double top.the volume at point b or c must be high. the duration of double top must be min of 20 days.short position can be created when it crosses the previous low.
  • : when there is two equivalent bottoms it is called double bottom..Volume at point b or c should be high.the duration is same as double top(20days).long positions can be created when it crosses the previous high.
  • : head and shoulders are called accumulation and distribution takes generally 3months of time to form.volume should be high in the left shoulder and volume should come down in the right can create a short position when the trend goes below the left shoulder.
  • : nverted Head and Shoulder pattern appears in a stock price movement when two equivalent bottoms are identified along with a significantly lower bottom between them. This happens when a strong hand tends to accumulate a stock in a short period. the conditions are same for both bullish and bearish
  • : The Cup pattern indicates the gradual accumulation of stocks by strong hands, which happens at longer duration. The rounding bottom will be visible with cup shape and low volume in overall trend. Condition for bullish: Cup shape should be visible with line charts with longer duration. During the rounding bottom the volume should be low.
  • : spot the steeper trend. rectangular price pattern-sideways movement is minimum of 3-7 days volume is expected to a increase while giving a breakout. a flag should not drift lower
  • : try price should be just after the breakout Exit price should be just after the price movement has reversed its direction Stop loss should be at the point where the breakout gap is filled
  • : 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 1.5 months. Condition for triangle: Visible triangle formation while connecting tops and bottom in straight line, triangle area should be 1.5 months duration. Triangle can breakout in any direction but high volume during breakout.

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