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Showing posts with the label Chart Patterns

Double top or double bottom / Tripple top or tripple bottom

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The double top and double bottom are both reversal patterns, which means they indicate a change in trend. They can be found on all time frames, but the longer the time frame you're trading, the more reliable your signal will be. The difference between a double top and a double bottom is that with a double top you'll see two peaks close together at around the same price level while with a double bottom there are two lows close together at around the same price level. This means that with a true reversal pattern (like these), there will always be at least one higher high or lower low before any new trend begins to form--and therefore it makes sense not only for predicting future price movements but also where you should place stops when entering trades based off these signals! Triple top or triple bottom Triple tops and bottoms are continuation patterns that can be used to predict future price movements. They occur when the same price level is tested three times, with

Triangles

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A triangle chart pattern is a price pattern that occurs when the price of an asset moves within converging trendlines, creating a triangular shape on the price chart. Triangles can be symmetrical, ascending, or descending, and can provide traders with information about potential trend reversals and continuation patterns. Symmetrical triangles occur when both trendlines converge towards a common point, indicating a period of consolidation and indecision in the market. This pattern can be a sign of a potential break in either direction, and traders will often use other forms of analysis to confirm a breakout before taking a position. Symmetrical triangles are continuation patterns, meaning they tend to form after a trend has already begun. They can also be either bullish or bearish and are characterized by converging trend lines that form an area of price congestion within the market. The pattern is aptly named because it resembles an equilateral triangle (a triangle with thr

Cup and Handle

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The cup and handle is one of the most common chart patterns you'll see, and can be used to predict future price movements. The pattern has two parts: a "cup" (which forms at the bottom of an uptrend) and a handle (which forms near the top). The cup is created by several weeks or months during which prices dip lower than they were during previous periods. The depth of this dip determines how far down into your chart you need to go before identifying it as part of your pattern; generally speaking, though, if you have less than 10 years worth of data available then start looking around where those 10 years begin--so for example if your data goes back only 5 years then look at what happened between 2008-2012 instead because that's where most people would consider their first decade ended! Once this downward trend has been established we then wait for prices to begin rising again until they reach approximately halfway up from where they started dipping down fro

Head and Shoulders

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A head and shoulders pattern is formed by two shoulders, a head, and a neckline. The pattern is confirmed when the price breaks below the neckline. The shape of this chart pattern can be deceptive because it may look as if there are three peaks instead of two shoulders and one head (which would make it a triangle). However, this difference in appearance is due to perspective; when looking at a chart from above or below--the perspective we see most often--it becomes difficult to determine where one peak ends and another begins. The head and shoulders pattern is a reversal chart pattern that is used to identify trend reversals in the financial markets. It is characterized by a peak (the "head"), followed by a higher peak (the "left shoulder"), followed by a lower peak (the "right shoulder"), and a neckline that connects the lows of the pattern. When the price of an asset breaks below the neckline, it is considered a sell signal, and the trader wo

Chart Patterns

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Chart patterns are a type of technical analysis that can be used to predict short term price movements. The patterns identify specific types of price behavior which tend to repeat over time, allowing traders to anticipate future price movements with greater accuracy. Chart patterns are not guaranteed to be effective, but they can be very useful for trading. Chart patterns are graphical representations of price and/or volume data that traders use to identify potential trades. They are formed by trend lines and/or other technical indicators and are used to identify market trends, trend reversals, and support and resistance levels. Some common chart patterns in trading include head and shoulders, triangles, and flags and pennants. Traders use chart patterns in conjunction with other technical and fundamental analysis to make informed trading decisions. When you're looking at a chart, you can see these patterns in the past price movements. They can help you predict future m