Price patterns are invariably used by technical analysts to forecast the market movement between rising & falling trend. Certain characteristics of price action has recognisable pattern which further enhances the confidence of a trader to ascertain the direction of the market. The characteristics of price pattern can be used for confirming the continuation or reversal pattern of the stock.
The most widely used patterns to set up the trade can be named as follows:
(a) Double top & Double Bottom
(b) Head & Shoulder or inverted head & shoulder
(c) Cup pattern
(d) Flag pattern
(e) Triangle pattern
These patterns are very useful for doing any technical analysis. if interpreted properly, its outcome can be astounding returns against the risk offered by the trader.