{"id":42423,"date":"2023-05-24T22:34:22","date_gmt":"2023-05-24T17:04:22","guid":{"rendered":"https://www.5paisa.com/finschool/?p=42423"},"modified":"2025-03-26T16:04:24","modified_gmt":"2025-03-26T10:34:24","slug":"technical-chart-analysis","status":"publish","type":"post","link":"https://www.5paisa.com/finschool/technical-chart-analysis/","title":{"rendered":"Technical Chart Analysis: Meaning \u0026amp; Trading Strategies"},"content":{"rendered":"\u003cdiv data-elementor-type=\u0022wp-post\u0022 data-elementor-id=\u002242423\u0022 class=\u0022elementor elementor-42423\u0022\u003e\u003csection class=\u0022elementor-section elementor-top-section elementor-element elementor-element-993586f elementor-section-boxed elementor-section-height-default elementor-section-height-default\u0022 data-id=\u0022993586f\u0022 data-element_type=\u0022section\u0022\u003e\u003cdiv class=\u0022elementor-container elementor-column-gap-default\u0022\u003e\u003cdiv class=\u0022elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-09a8c58\u0022 data-id=\u002209a8c58\u0022 data-element_type=\u0022column\u0022\u003e\u003cdiv class=\u0022elementor-widget-wrap elementor-element-populated\u0022\u003e\u003cdiv class=\u0022elementor-element elementor-element-a7ab6e6 elementor-widget elementor-widget-text-editor\u0022 data-id=\u0022a7ab6e6\u0022 data-element_type=\u0022widget\u0022 data-widget_type=\u0022text-editor.default\u0022\u003e\u003cdiv class=\u0022elementor-widget-container\u0022\u003e\u003ch2\u003e\u003cstrong\u003eIntroduction\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eTechnical Chart analysis has to do with forecasting future financial price movements based on past price movements which helps investors anticipate what is likely to happen to prices over time. It can be applied to stocks , indexes, commodities, futures or any tradable instrument where the price is influenced by the forces of supply and demand.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003e \u003c/strong\u003e\u003cstrong\u003eWhat are technical chart analysis? \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003eTechnical analysis is a tool, or method, which is used to predict the probable future price movement of a security-such as stock or currency pair-based on market data. Technical analysis is a theory which has the notion that collective actions of buying and selling of all the participants in the market accurately reflect the relevant information pertaining to a traded security.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003e \u003c/strong\u003e\u003cstrong\u003eUnderstanding Technical Analysis or Technical Chart Analysis \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eTechnical analysis are tools which are used to scrutinize the ways supply and demand for a security effects changes in price, volume and implied volatility. It operates from the assumption that past trading activity and price changes of a security can be good indicators of the security’s future price movements when paired with appropriate investing and trading rules. It is often used to generate short term trading signals from various charting tools, but can also help improve the evaluation of a security’s strength or weakness relative to the border market. Technical analysis was first introduced by Charles Dow and the Dow Theory in the late 1800s.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eList of Technical Charts in Stock Market \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003cstrong\u003eA. \u003c/strong\u003e\u003cstrong\u003eMulti-Bar Patterns Horizontal Congestion\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eDouble and Triple Tops/Bottoms\u003c/li\u003e\u003cli\u003eRectangles Triangles\u003c/li\u003e\u003cli\u003eSymmetrical\u003c/li\u003e\u003cli\u003eAscending and Descending\u003c/li\u003e\u003cli\u003eWedges Other\u003c/li\u003e\u003cli\u003eHead and Shoulders\u003c/li\u003e\u003cli\u003eCup and Handle\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003eB. \u003c/strong\u003e\u003cstrong\u003eCandlestick Patterns \u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eDoji\u003c/li\u003e\u003cli\u003eHarami\u003c/li\u003e\u003cli\u003eHanging Man/Hammer\u003c/li\u003e\u003cli\u003eShooting Star/Inverted Hammer\u003c/li\u003e\u003cli\u003eEngulfing\u003c/li\u003e\u003cli\u003eDark Cloud/Piercing\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e C. \u003c/strong\u003e\u003cstrong\u003eShort-Term Patterns \u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003ePennant/Flag\u003c/li\u003e\u003cli\u003eGaps\u003c/li\u003e\u003cli\u003ePipe Bottom\u003c/li\u003e\u003cli\u003eNarrow Range\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003eOverview of Technical Charts \u0026amp; Analysis \u003c/strong\u003e\u003c/h2\u003e\u003ch2\u003e\u003cstrong\u003eA. Multi-Bar Patterns Horizontal Congestion\u003c/strong\u003e\u003c/h2\u003e\u003col\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eDouble and Triple Tops/Bottoms\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003e\u003cstrong\u003ea. Double Top\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/1-2.svg\u0022\u003e\u003cimg fetchpriority=\u0022high\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42445 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/1-2.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/1-2.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/1-2.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/1-2.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/1-2.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/1-2.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/1-2.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/1-2.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/1-2.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/1-2.svg 810w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eTwo successive peaks separated by an opposite reversal point\u003c/li\u003e\u003cli\u003eEither rounded or pointed peaks that are usually at roughly the same price (resistance level)\u003c/li\u003e\u003cli\u003ePrice must break out of middle reversal point\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e                            \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eb. Double Bottom \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/2-3.svg\u0022\u003e\u003cimg decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42446 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/2-3.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/2-3.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/2-3.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/2-3.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/2-3.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/2-3.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/2-3.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/2-3.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/2-3.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/2-3.svg 810w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eTwo successive troughs separated by a peak\u003c/li\u003e\u003cli\u003eEither rounded or pointed troughs that are usually at roughly the same price (support level)\u003c/li\u003e\u003cli\u003ePrice must break out of middle peak\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003ec. Triple Top\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/3-4.svg\u0022\u003e\u003cimg decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42447 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/3-4.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/3-4.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/3-4.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/3-4.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/3-4.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/3-4.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/3-4.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/3-4.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/3-4.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/3-4.svg 810w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eThree distinct peaks at roughly the same price level separated by two intermittent troughs\u003c/li\u003e\u003cli\u003eBreakout occurs when price exceeds the extreme of the intermittent trough or a trend line connecting those points\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e \u003c/h2\u003e\u003cp\u003e\u003cstrong\u003ed. Triple Bottom\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/4-2.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42448 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/4-2.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/4-2.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/4-2.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/4-2.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/4-2.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/4-2.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/4-2.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/4-2.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/4-2.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/4-2.svg 810w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eThree distinct troughs at roughly the same price level separated by two intermittent peaks at any level\u003c/li\u003e\u003cli\u003eBreakout occurs when price exceeds the extreme of the intermittent peaks or a trend line connecting those points\u003c/li\u003e\u003cli\u003eBest performance may be after a sustained decline\u003c/li\u003e\u003cli\u003eAn average performance, but watch for failures\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003ch2\u003e2. Rectangles\u003c/h2\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-232.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42449 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-232.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-232.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-232.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-232.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-232.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-232.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-232.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-232.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-232.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-232.svg 1080w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003eCharacteristics:\u003c/p\u003e\u003cul\u003e\u003cli\u003eTrading range with support and resistance levels bounding price action\u003c/li\u003e\u003cli\u003eSlight tilt, similar to horizontal channel\u003c/li\u003e\u003cli\u003eOften has many false breakouts\u003c/li\u003e\u003cli\u003eThings to consider: ‐ Confirm a breakout ‐ “Shortfall” often indicator of eventual breakout direction\u003c/li\u003e\u003cli\u003eBest occurrence may be bottom breaking upward\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003e3. Symmetrical\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-231.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42450 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-231.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-231.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-231.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-231.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-231.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-231.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-231.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-231.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-231.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-231.svg 1080w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cp\u003eCharacteristics:\u003c/p\u003e\u003cul\u003e\u003cli\u003eBounded by a downward sloping upper trend line and an upward sloping lower trend line. Each bound is a straight trend line\u003c/li\u003e\u003cli\u003ePrices must touch each bound at least twice. Many false breakouts. Moderately successful in performance\u003c/li\u003e\u003cli\u003eThings to consider: ‐ Confirm a breakout\u003c/li\u003e\u003cli\u003eBest occurrence may be upward breaking out – above average for all patterns\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e4. Ascending\u003c/h2\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-230.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022 wp-image-42456 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-230.svg\u0022 alt=\u0022\u0022 width=\u0022318\u0022 height=\u0022318\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-230.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-230.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-230.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-230.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-230.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-230.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-230.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-230.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-230.svg 1080w\u0022 sizes=\u0022(max-width: 318px) 100vw, 318px\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics: \u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eBounded by a horizontal upper trend line and an upward sloping lower trend line. Each bound is a straight trend line.\u003c/li\u003e\u003cli\u003ePrices can break in either direction, but more commonly upward.\u003c/li\u003e\u003cli\u003eBreakout usually occurs in pattern. About average failure rates but many small false breakouts.\u003c/li\u003e\u003cli\u003ePost breakout performance average on upside but above average on downside.\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e5. Descending \u003c/h2\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42454 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-229.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-229.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-229.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-229.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-229.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-229.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-229.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-229.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-229.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-229.svg 1080w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics: \u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eBounded by two trend lines; the lower is horizontal and the upper slopes downward\u003c/li\u003e\u003cli\u003ePrices can break in either direction but most commonly downward\u003c/li\u003e\u003cli\u003eAbove-average performance on upside break; retracements occur often.\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e6. Wedge\u003c/h2\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42455 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-228.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-228.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-228.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-228.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-228.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-228.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-228.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-228.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-228.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-228.svg 1080w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/p\u003e\u003cp\u003eCharacteristics:\u003c/p\u003e\u003cul\u003e\u003cli\u003eBounded by two trend lines, each headed in the same direction; Price must touch a trend line at least five times before a breakout\u003c/li\u003e\u003cli\u003eOften occur following a panic or bubble\u003c/li\u003e\u003cli\u003ePerformance in both types is below average, and retracements are very common\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e7. Head and Shoulder\u003c/h2\u003e\u003cp\u003e\u003cstrong\u003ea. Top\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eThree peaks with center peak higher than the other two\u003c/li\u003e\u003cli\u003eShoulders should be at approximately the same level and the head higher\u003c/li\u003e\u003cli\u003eLine connecting the two through between the peaks is called the “neckline”\u003c/li\u003e\u003cli\u003ePattern is only complete on breaking the neckline\u003c/li\u003e\u003cli\u003eTarget is the distance from the head to the neckline projected from the neckline\u003c/li\u003e\u003cli\u003eThis is a standard pattern for tops and has one of the lowest failure rates\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e b. Bottom\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-227.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42457 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-227.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-227.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-227.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-227.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-227.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-227.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-227.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-227.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-227.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-227.svg 1080w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e \u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eInverted but otherwise identical to a top pattern except not as profitable\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e            \u003c/strong\u003e\u003c/p\u003e\u003ch2\u003e8. Cup and Handle\u003c/h2\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42458 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-226.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-226.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-226.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-226.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-226.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-226.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-226.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-226.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-226.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-226.svg 1080w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003ePattern consists of a rounded bottom (not a “V” bottom), two “lips” at each end, and a “handle” from the handle\u003c/li\u003e\u003cli\u003ePattern is complete with breakout above both lips\u003c/li\u003e\u003cli\u003eOften have a throwback\u003c/li\u003e\u003cli\u003eThe pattern’s performance ranks about average for bottom patterns\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003eB. Candlestick\u003c/strong\u003e\u003c/h2\u003e\u003col\u003e\u003cli\u003e\u003cstrong\u003eDoji\u003c/strong\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003e\u003cstrong\u003e \u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42460 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-225.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-225.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-225.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-225.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-225.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-225.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-225.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-225.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-225.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eA one-candle pattern formed when the open and close are the same price, and the high and low are roughly equidistant from the open and close\u003c/li\u003e\u003cli\u003eExtremely common\u003c/li\u003e\u003cli\u003eIndicates indecision in the marketplace and thus is a possible warning of price change\u003c/li\u003e\u003c/ul\u003e\u003col start=\u00222\u0022\u003e\u003cli\u003e\u003cstrong\u003eHarami \u003c/strong\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003e\u003cstrong\u003e \u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-224.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42461 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-224.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-224.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-224.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-224.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-224.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-224.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-224.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-224.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-224.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eA two-candle pattern of a large body of either color followed by a small body of the opposite color; The second body is completely within the body of the large body and is called a “spinning top”\u003c/li\u003e\u003cli\u003eAlthough common belief is that the Harami is a reversal pattern, many report that is has the potential of breaking either way\u003c/li\u003e\u003cli\u003eA variation that has a Doji instead of a spinning top as the second candle has equally average performance and random breakout\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e3. Hanging Man and Hammer\u003c/strong\u003e\u003c/p\u003e\u003cp style=\u0022text-align: center;\u0022\u003e\u003cstrong\u003e \u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-223.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022alignnone size-medium wp-image-42462\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-223.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-223.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-223.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-223.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-223.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-223.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-223.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-223.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-223.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/strong\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eOne-candle patterns differentiated by the color of the body. Each pattern has a high that coincides with either the opening or closing price\u003c/li\u003e\u003cli\u003eHanging man, thought to be a continuation pattern, actually breaks in either direction randomly with a slight upward bias. Its overall performance is below average\u003c/li\u003e\u003cli\u003eHammers occur relatively frequently but have below-average performance\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e4. Shooting Star and Inverted Hammer\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-222.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42464 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-222.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-222.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-222.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-222.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-222.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-222.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-222.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-222.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-222.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eA one-candle inverted hanging man or hammer pattern. Hammers by themselves have white bodies and shooting stars have black bodies\u003c/li\u003e\u003cli\u003eAs a one-candle pattern, the shooting star has average performance. The same is true for the single inverted hammer\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e5. Engulfing\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-221.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42465 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-221.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-221.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-221.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-221.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-221.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-221.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-221.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-221.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-221.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eA two-bar pattern in which the second bar body completely engulfs the first bar body\u003c/li\u003e\u003cli\u003eA bottom engulfing pattern, with a short black body followed by a tall white body, is thought to be an upward reversal pattern and actually has very good performance on a downward breakout in a downward trend\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e6. Dark Cloud Cover and Piercing Line\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-220.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42466 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-220.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-220.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-220.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-220.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-220.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-220.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-220.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-220.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-220.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eThe dark cloud cover is a two-bar pattern where the second bar closes higher than the first and is black versus white in the first bar\u003c/li\u003e\u003cli\u003eThe piercing line is the opposite of the dark cloud cover in that the second bar is white and lower than the first bar which is black\u003c/li\u003e\u003cli\u003eThe dark cloud is thought to be a downward reversing pattern\u003c/li\u003e\u003cli\u003eThe piercing line pattern is thought to be an upward reversing pattern\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003eC. Short Term Patterns\u003c/strong\u003e\u003c/h2\u003e\u003col\u003e\u003cli\u003e\u003cstrong\u003ePenant/Flag\u003c/strong\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003e\u003cstrong\u003e \u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-219.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42467 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-219.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-219.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-219.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-219.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-219.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-219.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-219.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-219.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-219.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-219.svg 1080w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003ePennant and flag patterns are variations of the same pattern\u003c/li\u003e\u003cli\u003eThese patterns are often preceded by a steep, sharp price change, up or down, and form a short consolidation that appears like a triangle or flag. Generally, the pattern slopes slightly in the direction opposite from the trend\u003c/li\u003e\u003cli\u003eThe breakout in either direction is often followed by a move that equals the earlier steep, sharp price change into the pattern\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003col start=\u00222\u0022\u003e\u003cli\u003e\u003cstrong\u003eGaps\u003c/strong\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eDefinition – no trading (gap) at specific prices\u003c/li\u003e\u003cli\u003eGaps can be considered “up” or “down”\u003c/li\u003e\u003cli\u003eGaps are caused by appreciable changes in supply and demand from one close to the following open\u003c/li\u003e\u003cli\u003eGaps are generally profitable on breakouts from patterns, trends, support or resistance\u003c/li\u003e\u003cli\u003eA method of trading a gap is the “explosion gap pivot.” It assures that the gap is valid\u003c/li\u003e\u003cli\u003eAfter the gap, wait for “throwback.” If throwback “covers” the gap, no action. If the throwback stops, this is called the “pivot low.” Place buy entry above high of the gap bar\u003c/li\u003e\u003cli\u003e“Pivot” is the lowest level of the post-gap breakout\u003c/li\u003e\u003cli\u003eProtective stops initially placed at gap low and then below pivot low\u003c/li\u003e\u003c/ul\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003col start=\u00223\u0022\u003e\u003cli\u003e\u003cstrong\u003eTwo-Bar Reversal Button or Pipe Bottom\u003c/strong\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003e\u003cstrong\u003e\u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-218.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42468 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-218.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-218.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-218.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-218.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-218.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-218.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-218.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-218.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-218.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eTwo bars and occurs at the end of a large trend, up or down trend. Ideally, the first bar, in a bottom pattern, closes at the low, and the second bar closes in the upper half of the range. It is more reliable in weekly data\u003c/li\u003e\u003cli\u003eBar ranges are larger than preceding bar ranges\u003c/li\u003e\u003cli\u003eAction occurs on breakout through second bar\u003c/li\u003e\u003c/ul\u003e\u003col start=\u00224\u0022\u003e\u003cli\u003e\u003cstrong\u003eVolatility Pattern\u003c/strong\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003e\u003cstrong\u003e \u003ca href=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-217.svg\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42471 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-217.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-217.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-217.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-217.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-217.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-217.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-217.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-217.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-217.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003e \u003c/strong\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eDull activity is known as “low volatility.” New trends often begin from periods of low volatility\u003c/li\u003e\u003cli\u003eOne way to look at volatility is to observe the relationship between price bars\u003c/li\u003e\u003cli\u003e“Range” is the spread between high and low in a price bar\u003c/li\u003e\u003cli\u003eIf a bar is followed by a bar with less range, volatility is declining; the second bar is called a “narrow range” bar\u003c/li\u003e\u003cli\u003eWhen this second bar’s range is contained within the range of its preceding bar, it is called an “inside bar.”\u003c/li\u003e\u003c/ul\u003e\u003col start=\u00225\u0022\u003e\u003cli\u003e\u003cstrong\u003eNarrow Range\u003c/strong\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-42470 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-216.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/marathi/finschool/wp-content/uploads/2023/05/Group-216.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-216.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-216.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-216.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-216.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-216.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-216.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/05/Group-216.svg 96w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eCharacteristics:\u003c/strong\u003e\u003c/p\u003e\u003cul\u003e\u003cli\u003eOne low volatility pattern is called a “Narrow Range” pattern and consists of a bar with a range narrower than its preceding bars\u003c/li\u003e\u003cli\u003eThe graph shows a four-bar, Narrow Range pattern (NR4) with four bars, the fourth bar having a narrower range than the preceding three bars\u003c/li\u003e\u003cli\u003eThe breakout occurs on a break above or below the high or low of the narrow range\u003c/li\u003e\u003c/ul\u003e\u003ch2\u003e\u003cstrong\u003eIdentifying Trends and Support/Resistance Levels \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eSupport level is the level where the price regularly stops falling and bounces back up while the resistance level is where the price normally stops rising and dips back down. The levels exist as a product of supply and demand. If there are more buyers than sellers, the price could rise, and if there are more sellers than buyers the price tends to fall.\u003c/p\u003e\u003cp\u003eThe more often a price hits either level, the more reliable that level is likely to be in predicting the future movements. If a price touches or breaks through a support or resistance level but jumps back fairly it is only testing that level. But if price breaks through any given level for a longer period of time, it is likely to keep rising or falling until a new support or resistance level is established.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eTechnical Patterns and Trading Strategies in stock market \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e A trading strategy is a plan for buying and selling stocks designed to generate a good return on investments. A good trading strategy should be consistent. Trading indicators are mathematical calculations which are plotted as lines on a price chart and can help traders identify certain signals and trends within the market.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eRisk Management and Position Sizing \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003ePosition Sizing refers to the number of units invested in a particular security by an investor or trader. An investors account size and risk tolerance should be considered when determining the position sizing. While position sizing is an important concept in most every investment type the term is most closely associated with faster moving investors like day traders and currency traders. Even with correct position sizing investors may lose more than their specified risk limits if a stock gaps below their stop loss order.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eBack testing and Performance Evaluation \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eBack Testing is applying a trading system to historical data to verify how that system would have performed during a specified period. Trading platforms generally support back testing through which the traders test ideas and gain knowledge without risking funds. Common back testing measures include net profit/loss, return, risk-adjusted return, market exposure and volatility. Analysts use back testing as a way to test and compare various trading techniques without risking money. A successful back test will show traders a strategy that’s proven to show positive results historically. While the market never moves the same, back testing relies on the assumption that stocks move in similar patterns as they did historically.\u003c/p\u003e\u003cp\u003eEvaluating stock performance is very individual to each investor. Just as every person has different appetites for risk, plans for diversification, and investing strategies, so too does every investor have different standards for evaluating stock performance. Evaluating the performance of a stock requires more than simply looking at the change in price over time. Returns can only be properly compared against an appropriate benchmark that reflects the investment style and risk level of the stock you’re looking at.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eTrading Psychology and Discipline\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eTrading Psychology is the way you approach or think about and feel about the stock market and your trades. The traders psychology affects your trades performance. If the traders emotions cloud up decision making then the trader ends up making loss. To be a successful trader , one need to recognize their emotional biases like greed, fear, hope, panic and then keep a check of them. The tips include to avoid overconfidence, learn from mistakes, Balance trading risks, have a trading process and follow it, Follow effective trading habits. Thus trading psychology and discipline is very important to succeed as a trader.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003e \u003c/strong\u003e\u003cstrong\u003eConclusion \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eThus technical analyst can add value to an investment team by providing trading/investment ideas depending on the nature of the fund. In addition technical analysis can add value to a fundamental portfolio approach by adding input on the timing of the purchase or sale of a security.\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/section\u003e\u003c/div\u003e","protected":false},"excerpt":{"rendered":"\u003cp\u003eIntroduction Technical Chart analysis has to do with forecasting future financial price movements based on past price movements which helps investors anticipate what is likely to happen to prices over time. It can be applied to stocks , indexes, commodities, futures or any tradable instrument where the price is influenced by the forces of supply … \u003ca title=\u0022Technical Chart Analysis: Meaning \u0026amp; Trading Strategies\u0022 class=\u0022read-more\u0022 href=\u0022https://www.5paisa.com/marathi/finschool/technical-chart-analysis/\u0022 aria-label=\u0022Read more about Technical Chart Analysis: Meaning \u0026amp; Trading Strategies\u0022\u003eRead more\u003c/a\u003e\u003c/p\u003e","protected":false},"author":1,"featured_media":42444,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18,180],"tags":[],"class_list":["post-42423","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blogs","category-trading-chart-patterns"],"acf":[],"_links":{"self":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/42423","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts"}],"about":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/types/post"}],"author":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/users/1"}],"replies":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/comments?post=42423"}],"version-history":[{"count":15,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/42423/revisions"}],"predecessor-version":[{"id":68629,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/42423/revisions/68629"}],"wp:featuredmedia":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/media/42444"}],"wp:attachment":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/media?parent=42423"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/categories?post=42423"},{"taxonomy":"post_tag","embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/tags?post=42423"}],"curies":[{"name":"wp","href":"https://api.w.org/{rel}","templated":true}]}}