TOP 20 Key Patterns [cheat sheet]
Updated
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Here are some Educational Chart Patterns that you should know in 2022.
I hope you will find this information educational & informative.
>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 the 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 are 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 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 the 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 the 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, the price may breakout above the upper trend line. When the 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 from 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 a lower volume and the breakouts should occur on a higher volume.
Most traders use pennants in conjunction with other forms of technical analysis that act as confirmation.
>Cup and Handle Pattern
A cup and handle price pattern on a security's price chart is a technical indicator that resembles a cup with a handle, where the cup is in the shape of a "u" and the handle has a slight downward drift.
The cup and handle are considered a bullish signal, with the right-hand side of the pattern typically experiencing lower trading volume. The pattern's formation may be as short as seven weeks or as long as 65 weeks.
>What is a Bullish Flag Pattern
When the prices are in an uptrend a bullish flag pattern shows a slow consolidation lower after an aggressive uptrend.
This indicates that there is more buying pressure moving the prices up than down and indicates that the momentum will continue in an uptrend.
Traders wait for the price to break above the resistance of the consolidation after this pattern is formed to enter the market.
>What is the Bearish Flag Pattern
When the prices are in the downtrend a bearish flag pattern shows a slow consolidation higher after an aggressive downtrend.
This indicates that there is more selling pressure moving the prices down rather than up and indicates that the momentum will continue in a downtrend.
Traders wait for the price to break below the support of the consolidation after this pattern is formed to enter in the short position.
> Channel
A channel chart pattern is characterized as the addition of two parallel lines which act as the zones of support and resistance.
The upper trend line or the resistance connects a series of highs.
The lower trend line or the support connects a series of lows.
Below is the formation of the channel chart pattern:
>Megaphone pattern
The megaphone pattern is a chart pattern. It’s a rough illustration of a price pattern that occurs with regularity in the stock market. Like any chart pattern, there are certain market conditions that tend to follow the formation of the megaphone pattern.
The megaphone pattern is characterized by a series of higher highs and lower lows, which is a marked expansion in volatility:
>What is a ‘diamond’ pattern?
A bearish diamond formation or diamond top is a technical analysis pattern that can be used to detect a reversal following an uptrend; the however bullish diamond pattern or diamond bottom is used to detect a reversal following a downtrend.
This pattern occurs when a strong up-trending price shows a flattening sideways movement over a prolonged period of time that forms a diamond shape.
Detecting reversals is one of the most profitable trading opportunities for technical traders. A successful trader combines these techniques with other technical indicators and other forms of technical analysis to maximize their odds of success.
Technicians using charts search for archetypal price chart patterns, such as the well-known head and shoulders or double top /bottom reversal patterns, study technical indicators, and moving averages and look for forms such as lines of support, resistance, channels and more obscure formations such as flags, pennants, balance days and cup and handle patterns.
Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down the volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation. Technicians also look for relationships between price/ volume indices and market indicators. Examples include the moving average, relative strength index and MACD. Other avenues of study include correlations between changes in Options (implied volatility ) and put/call ratios with a price. Also important are sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility, etc.
There are many techniques in technical analysis. Adherents of different techniques (for example Candlestick analysis, the oldest form of technical analysis developed by a Japanese grain trader; Harmonics; Dow theory; and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one technique. Some technical analysts use subjective judgment to decide which pattern(s) a particular instrument reflects at a given time and what the interpretation of that pattern should be. Others employ a strictly mechanical or systematic approach to pattern identification and interpretation.
Contrasting with technical analysis is fundamental analysis, the study of economic factors that influence the way investors price financial markets. Technical analysis holds that prices already reflect all the underlying fundamental factors. Uncovering the trends is what technical indicators are designed to do, although neither technical nor fundamental indicators are perfect. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions.
Trade with care.
If you like our content, please feel free to support our page with a like, comment
Consider following me for the latest updates and Long /Short calls on almost every exchange.
I post short mid and long-term trade setups too.
Here are some Educational Chart Patterns that you should know in 2022.
I hope you will find this information educational & informative.
>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 the 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 are 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 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 the 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 the 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, the price may breakout above the upper trend line. When the 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 from 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 a lower volume and the breakouts should occur on a higher volume.
Most traders use pennants in conjunction with other forms of technical analysis that act as confirmation.
>Cup and Handle Pattern
A cup and handle price pattern on a security's price chart is a technical indicator that resembles a cup with a handle, where the cup is in the shape of a "u" and the handle has a slight downward drift.
The cup and handle are considered a bullish signal, with the right-hand side of the pattern typically experiencing lower trading volume. The pattern's formation may be as short as seven weeks or as long as 65 weeks.
>What is a Bullish Flag Pattern
When the prices are in an uptrend a bullish flag pattern shows a slow consolidation lower after an aggressive uptrend.
This indicates that there is more buying pressure moving the prices up than down and indicates that the momentum will continue in an uptrend.
Traders wait for the price to break above the resistance of the consolidation after this pattern is formed to enter the market.
>What is the Bearish Flag Pattern
When the prices are in the downtrend a bearish flag pattern shows a slow consolidation higher after an aggressive downtrend.
This indicates that there is more selling pressure moving the prices down rather than up and indicates that the momentum will continue in a downtrend.
Traders wait for the price to break below the support of the consolidation after this pattern is formed to enter in the short position.
> Channel
A channel chart pattern is characterized as the addition of two parallel lines which act as the zones of support and resistance.
The upper trend line or the resistance connects a series of highs.
The lower trend line or the support connects a series of lows.
Below is the formation of the channel chart pattern:
>Megaphone pattern
The megaphone pattern is a chart pattern. It’s a rough illustration of a price pattern that occurs with regularity in the stock market. Like any chart pattern, there are certain market conditions that tend to follow the formation of the megaphone pattern.
The megaphone pattern is characterized by a series of higher highs and lower lows, which is a marked expansion in volatility:
>What is a ‘diamond’ pattern?
A bearish diamond formation or diamond top is a technical analysis pattern that can be used to detect a reversal following an uptrend; the however bullish diamond pattern or diamond bottom is used to detect a reversal following a downtrend.
This pattern occurs when a strong up-trending price shows a flattening sideways movement over a prolonged period of time that forms a diamond shape.
Detecting reversals is one of the most profitable trading opportunities for technical traders. A successful trader combines these techniques with other technical indicators and other forms of technical analysis to maximize their odds of success.
Technicians using charts search for archetypal price chart patterns, such as the well-known head and shoulders or double top /bottom reversal patterns, study technical indicators, and moving averages and look for forms such as lines of support, resistance, channels and more obscure formations such as flags, pennants, balance days and cup and handle patterns.
Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down the volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation. Technicians also look for relationships between price/ volume indices and market indicators. Examples include the moving average, relative strength index and MACD. Other avenues of study include correlations between changes in Options (implied volatility ) and put/call ratios with a price. Also important are sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility, etc.
There are many techniques in technical analysis. Adherents of different techniques (for example Candlestick analysis, the oldest form of technical analysis developed by a Japanese grain trader; Harmonics; Dow theory; and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one technique. Some technical analysts use subjective judgment to decide which pattern(s) a particular instrument reflects at a given time and what the interpretation of that pattern should be. Others employ a strictly mechanical or systematic approach to pattern identification and interpretation.
Contrasting with technical analysis is fundamental analysis, the study of economic factors that influence the way investors price financial markets. Technical analysis holds that prices already reflect all the underlying fundamental factors. Uncovering the trends is what technical indicators are designed to do, although neither technical nor fundamental indicators are perfect. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions.
Trade with care.
If you like our content, please feel free to support our page with a like, comment
Note
Note
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Note
#Bitcoin Long Term Technical Analysis:-
As Per the historical chart:-
As we can see in the chart first and second bear markets BTC drop -84 to -86% from the top and in this current bear market too we expect an 84% to 86% drop from the top.
If BTC drop according to the calculation then
10k to 11k will be the bottom
So in this bear market, we expect an 84% to 86% drop from the top
Note
Note
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