Dow theory was very well proven theory as far as trend is concern but it has limitation since it did not serve to indicate the quality of trend . So to signify the trend quality , accumlation, distribution patterns the price patterns were introduced which are using Dow theory as base.
Double top — It is two equivalent tops the span between the tops should be minimum one month . The two equivalent top signifies the seller zone if the price falls below the previous bottom( with good volume) which is in between two tops it is sign of bearish trend.
Head & Shoulder
The pattern which has three peaks but the middle peak or top is high enough and two peaks on side of high peak are equivalent and the span to form the structure is 3-4 months then we can term it as Head and Shoulder pattern . It is a pattern for distribution that means some strong hand is in liquidating the accumlated stocks. When the price breaks the neck line or previous bottom from Rt shoulder followed by good volume support then its the begning of bearish trend.
Flag pattern
Flag pattern is steep rise in price at least 70-80 deg with in 7-8 days with substantial volume followed by side ways movement but not down wards ie the flag should not drift . Such behaviour can be called as Flag pattern.
, , Price Patterns, cup pattern, Double top bottom, flag pattern, Head and Shoulder, trend, triangle pattern
