11 Chart Patterns you need to know in 2021
Güncellendi
Hello Traders,
Here is some Educational Chart Patterns that you should know in 2021.
Most of these patterns are seen daily in Stocks, Forex and different markets across the globe.
I hope you will find this information educational & informative.
Your support is appreciated with a like & Comment
Head and Shoulders Pattern
A head and shoulders pattern is a chart formation that appears as a baseline with three peaks, the outside two are close in height and the middle is highest.
In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.
Inverse Head and Shoulders Pattern
An inverse head and shoulders is similar to the standard head and shoulders pattern, but inverted: with the head and shoulders top used to predict reversals in downtrends
An inverse head and shoulders pattern, upon completion, signals a bull market
Investors typically enter into a long position when the price rises above the resistance of the neckline.
Double Top (M) Pattern
A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs.
It is confirmed once the asset's price falls below a support level equal to the low between the two prior highs.
Double Bottom (W) Pattern
The double bottom looks like the letter "W". The twice-touched low is considered a support level.
The advance of the first bottom should be a drop of 10% to 20%, then the second bottom should form within 3% to 4% of the previous low, and volume on the ensuing advance should increase.
The double bottom pattern always follows a major or minor downtrend in a particular security, and signals the reversal and the beginning of a potential uptrend.
Tripple Top Pattern
A triple top is formed by three peaks moving into the same area, with pullbacks in between.
A triple top is considered complete, indicating a further price slide, once the price moves below pattern support.
A trader exits longs or enters shorts when the triple top completes.
If trading the pattern, a stop loss can be placed above resistance (peaks).
The estimated downside target for the pattern is the height of the pattern subtracted from the breakout point.
Triple Bottom Pattern
A triple bottom is a visual pattern that shows the buyers (bulls) taking control of the price action from the sellers (bears).
A triple bottom is generally seen as three roughly equal lows bouncing off support followed by the price action breaching resistance.
The formation of triple bottom is seen as an opportunity to enter a bullish position.
Falling Wedge Pattern
When a security's price has been falling over time, a wedge pattern can occur just as the trend makes its final downward move.
The trend lines drawn above the highs and below the lows on the price chart pattern can converge as the price slide loses momentum and buyers step in to slow the rate of decline.
Before the lines converge, price may breakout above the upper trend line. When price breaks the upper trend line the security is expected to reverse and trend higher.
Traders identifying bullish reversal signals would want to look for trades that benefit from the security’s rise in price.
Rising Wedge Pattern
This usually occurs when a security’s price has been rising over time, but it can also occur in the midst of a downward trend as well.
The trend lines drawn above and below the price chart pattern can converge to help a trader or analyst anticipate a breakout reversal.
While price can be out of either trend line, wedge patterns have a tendency to break in the opposite direction from the trend lines.
Therefore, rising wedge patterns indicate the more likely potential of falling prices after a breakout of the lower trend line.
Traders can make bearish trades after the breakout by selling the security short or using derivatives such as futures or options, depending on the security being charted.
These trades would seek to profit on the potential that prices will fall.
Flag Pattern
A flag pattern, in technical analysis, is a price chart characterized by a sharp countertrend (the flag) succeeding a short-lived trend (the flag pole).
Flag patterns are accompanied by representative volume indicators as well as price action.
Flag patterns signify trend reversals or breakouts after a period of consolidation.
Pennant Pattern
Pennants are continuation patterns where a period of consolidation is followed by a breakout used in technical analysis.
It's important to look at the volume in a pennant—the period of consolidation should have lower volume and the breakouts should occur on higher volume.
Most traders use pennants in conjunction with other forms of technical analysis that act as confirmation.
Consolidation Pattern
Consolidation is a technical analysis term used to describe a stock's price movement within a given support and resistance range for a period of time. It is generally caused due to trader indecisiveness.
Consolidated financial statements are used by analysts to evaluate parent and subsidiary companies as a single company.
Thanks for Reading, ill see you in the next Educational Post
Global Fx Education
Here is some Educational Chart Patterns that you should know in 2021.
Most of these patterns are seen daily in Stocks, Forex and different markets across the globe.
I hope you will find this information educational & informative.
Your support is appreciated with a like & Comment
Head and Shoulders Pattern
A head and shoulders pattern is a chart formation that appears as a baseline with three peaks, the outside two are close in height and the middle is highest.
In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.
Inverse Head and Shoulders Pattern
An inverse head and shoulders is similar to the standard head and shoulders pattern, but inverted: with the head and shoulders top used to predict reversals in downtrends
An inverse head and shoulders pattern, upon completion, signals a bull market
Investors typically enter into a long position when the price rises above the resistance of the neckline.
Double Top (M) Pattern
A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs.
It is confirmed once the asset's price falls below a support level equal to the low between the two prior highs.
Double Bottom (W) Pattern
The double bottom looks like the letter "W". The twice-touched low is considered a support level.
The advance of the first bottom should be a drop of 10% to 20%, then the second bottom should form within 3% to 4% of the previous low, and volume on the ensuing advance should increase.
The double bottom pattern always follows a major or minor downtrend in a particular security, and signals the reversal and the beginning of a potential uptrend.
Tripple Top Pattern
A triple top is formed by three peaks moving into the same area, with pullbacks in between.
A triple top is considered complete, indicating a further price slide, once the price moves below pattern support.
A trader exits longs or enters shorts when the triple top completes.
If trading the pattern, a stop loss can be placed above resistance (peaks).
The estimated downside target for the pattern is the height of the pattern subtracted from the breakout point.
Triple Bottom Pattern
A triple bottom is a visual pattern that shows the buyers (bulls) taking control of the price action from the sellers (bears).
A triple bottom is generally seen as three roughly equal lows bouncing off support followed by the price action breaching resistance.
The formation of triple bottom is seen as an opportunity to enter a bullish position.
Falling Wedge Pattern
When a security's price has been falling over time, a wedge pattern can occur just as the trend makes its final downward move.
The trend lines drawn above the highs and below the lows on the price chart pattern can converge as the price slide loses momentum and buyers step in to slow the rate of decline.
Before the lines converge, price may breakout above the upper trend line. When price breaks the upper trend line the security is expected to reverse and trend higher.
Traders identifying bullish reversal signals would want to look for trades that benefit from the security’s rise in price.
Rising Wedge Pattern
This usually occurs when a security’s price has been rising over time, but it can also occur in the midst of a downward trend as well.
The trend lines drawn above and below the price chart pattern can converge to help a trader or analyst anticipate a breakout reversal.
While price can be out of either trend line, wedge patterns have a tendency to break in the opposite direction from the trend lines.
Therefore, rising wedge patterns indicate the more likely potential of falling prices after a breakout of the lower trend line.
Traders can make bearish trades after the breakout by selling the security short or using derivatives such as futures or options, depending on the security being charted.
These trades would seek to profit on the potential that prices will fall.
Flag Pattern
A flag pattern, in technical analysis, is a price chart characterized by a sharp countertrend (the flag) succeeding a short-lived trend (the flag pole).
Flag patterns are accompanied by representative volume indicators as well as price action.
Flag patterns signify trend reversals or breakouts after a period of consolidation.
Pennant Pattern
Pennants are continuation patterns where a period of consolidation is followed by a breakout used in technical analysis.
It's important to look at the volume in a pennant—the period of consolidation should have lower volume and the breakouts should occur on higher volume.
Most traders use pennants in conjunction with other forms of technical analysis that act as confirmation.
Consolidation Pattern
Consolidation is a technical analysis term used to describe a stock's price movement within a given support and resistance range for a period of time. It is generally caused due to trader indecisiveness.
Consolidated financial statements are used by analysts to evaluate parent and subsidiary companies as a single company.
Thanks for Reading, ill see you in the next Educational Post
Global Fx Education
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Hello Traders.Thanks for all the support, Comments & Likes.
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Thanks so much for all the support! I really appreciate it. And I wish you all the best throughout 2021.Have a look at my latest chart of XAUUSD
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