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[EDU] Trading the Chart pattern SeriesTrading the Chart pattern Basics and Advanced Concepts Anatomy of Head and Shoulders Head and shoulder could possibly be one of the most common chart pattern we see on the chart. So what makes up this pattern? They are: 1. Left Shoulder: > The left shoulder forms as the price initially rises and then experiences a pullback. This creates the left peak of the pattern. > The pullback is typically less severe than the subsequent pullback after the head is formed. 2. Head: > The head is formed when the price makes a higher peak than the left shoulder, indicating a strong upward movement. > The head is the highest point in the pattern and is often characterized by increased trading volume. 3. Right Shoulder: > Following the formation of the head, there is another pullback in price, creating the right shoulder. > Similar to the left shoulder, the right shoulder is usually lower than the head and is accompanied by a decrease in trading volume. 4. Neckline: > The neckline is a horizontal line that connects the lows of the left shoulder, head, and right shoulder. > The neckline serves as a support level, and a significant break below this line is considered a confirmation of the pattern. This is Shown in Figure 1 Advanced Concept Of course, the world is not Perfect, and so is the financial market. "textbook" head and shoulder patterns would be a small fraction of the head and shoulders formed in the market. Therefore, we should also be aware of "catching" these other variants! Complex head and shoulder Figure 2 > could be one that has more than 1 left shoulder. > Right shoulder made a new Lower Low, tell tale sign this uptrend is weakening Extended head and shoulder Figure 3 > the left and right shoulder showed extended stretch in terms of duration but still it is a head and shoulder in nature > at the same time, this pattern also brings out to yet another variation, head and shoulder no necessarily is a reversal pattern. In this case it is a trend continuation pattern!(if you didnt realize that) :) Head and shoulders pattern as continuation Pattern Figure 4 > over here we have a trend continuation pattern of head and shoulder > 2nd, it has a slanted neckline > other than that it is pretty much a classic head and shoulder. Hope you all learn something from this article! Cheers. Follow and like my post if you find it useful! Thank you!
Education
by Shadowing_The_Big_Boys
1
A possibility of a 100% move in Confidence Petroleum India Ltd.The stock is in a ascending triangle setup on weekly timeframe. The 90-95 zone has been providing some resistance for the stock since 2021 and preventing it from launching above the INR 100 mark. But this 90-95 supply zone is now getting weaker since the constant rising demand for this stock wont let it dip below its previous lows every time and it is thus creating a beautiful upwards rising support zone. The triangle breakout(when it happens), suggests an upward target of around INR180 for this stock. Volume too has picked up this week. It should not take very long now for the breakout to play out. On the downside 80-85 is good support area for the stock. Note*- The views expressed are personal opinions/observations. Please study technicals &fundamentals of a stock thoroughly before taking any financial decisions.
NSE:CONFIPETLong
by neeraj_2_sharma
3
Symmetrical Triangle on USD/CAD @ D1This daily chart USD/CAD formation resembles a symmetrical triangle pattern. It can be used for a trend continuation breakout setup. My potential entry is marked with the cyan line, which is located at 10% of the triangle's base width above the upper border. My take-profit will be at the green line, which is located at 100% of the triangle's base width above the upper border. I will set my stop-loss to the triangle's lower corner (1.36292). Bearish breakouts from this formation are to be ignored.
Long
by AndriyMoraru
4
Costco the case for higher highs maybe probableHI guys. This is an analysis thread to assess the technical developments found in Costco. I will layout some general findings on the macro scale, then update as new developments proceed in the technicals for COST. The purpose is to provide unbiased TA opinions, where i give both bearish or bullish cases depending on facts in charts to help make informed trading/investing decisions. Initial analysis will be on the 1 week timeframe. First things first. The 2 Ascending triangle patterns found. A blue one A black one Notice the Black triangle, this is a larger or more influential pattern developing since May 2022. It holds more wait if signs show we a breaking out of this. Targets would be $680-720 range. Confirmation of a test of support Above the horizontal upper black trendline is needed. This would indicate a continuation of COST previous uptrend, as Ascending triangles when confirmed are strong continuation patterns. The smaller Blue Ascending triangle seems like a intermediate term consolidation area as well. Notice how prices have consolidated Above the Black horizontal trendline of the bigger triangle, for weeks. We have closed Last week ABOVE Blue triangle. We must await confirmation of this breakout. This could mean we are breaking out of both Triangles. Look also to the 21 EMA (Purple colored moving average). We have recently bounced off of a support test. This is a great sign. This can be a future support test area also. But i always look at it as a level of defence. It has moved up to the $550 level. Overall, $550 level is critical support level now. Below it we go back into the larger ascending triangle, if we do go back below, this would indicate a fakeout. An important thing to observe is VOLUME. For this move to follow through, we must see an increase or spike in volume. Which currently doesn't seem like its there. Which could lead to a fakeout. So we must pay attention. Remember Volume can really make or break a move especially a chart pattern. Momentum indicators STOCH RSI and MACD are showing signs of bullishness STOCH RSI has a BULLISH CROSS. MACD is attempting to cross Bullish. If MACD crosses, this will give signs that uptrend is now more likely. Taking positions must be done after COnfirmation or a decisive move Up. Never take positions inside of a chart pattern, always consider entering after confirmation of breakout. __________________________________________________________________________________ Thank you for taking the time to read my analysis. Hope it helped keep you informed. Please do support my ideas by boosting, following me and commenting. Thanks again. Stay tuned for more updates on COST in the near future. If you have any questions, do reach out. Thank you again. DISCLAIMER: This is not financial advice, i am not a financial advisor. The thoughts expressed in the posts are my opinion and for educational purposes. Do not use my ideas for the basis of your trading strategy, make sure to work out your own strategy and when trading always spend majority of your time on risk management strategy.
NASDAQ:COSTLong
by SafofAllTrades
Part 2: Price Action Breakdown - Advance ElementsIn the first part, we discussed the components of the price action theory. We covered value area, control line, and excess price with examples, setups & guidelines (with my own observations.) Now, in this idea, we are going to cover the following topics: No trading zone Initiative & responsive trading Shifting of the value area Bullish Value area Bearish value area Extention of the value area Combining all the pieces I request all of you to visit our first part if you have not read it yet. Check out the following demo chart, and try to mention each component by yourself: Now, you can check the following chart, and see if you have denoted correctly or noted: 1) No trading zone: No trading zone/activities is the area where trading is not happening. It shows the strength of buyers in the lower band and the strength of the sellers in the upper boundary. Its shows who is controlling, who will be controlling, and who have lost the opportunity. What does it mean? 🔹If the length of the no-trading zone is wide at the lower band, it shows that buyers are controlling the movement and sellers are not able to form trading activities. 🔹If the length of the no-trading zone is wide at the upper band, it shows that sellers are controlling the movement and buyers are not able to form trading activities. Observing the given formation that shows a sideways value area is enough to understand the whole story. There were actually three no-trading zones in the value area: two on the lower band and one on the upper band. The first NTZ(No-trading zone) on the lower band was the signal of the movement controlled by buyers. NTZ-2 was the widest of the value area, where sellers snatched the control from buyers and started outnumbering the buyers. NTZ-3 was the last no-trading zone where the buyers were on the controlled buy and couldn't give a response to the sellers' initiative move. The excess was the last price point from sellers that started the supply pressure. 2) Initiative & responsive trading As we discussed earlier, price movements are the result of the interaction between supply and demand. Buyer(demand) and seller's(supply) intuition are the main components of the price. Value area from where buyers and sellers are satisfied with the current prices. Neither buyers want to increase, nor the seller is interested in low prices at least for some duration. It's called equilibrium between buyers and sellers. What if it's enough? # Now buyers don't want to keep the prices as it's too low for them. So, the buyers will make an initiative to break the upper band of the value area. It is called "initiative" by buyers. # Sellers have to stop them from going out of the value area by making excess, which is called "response" by sellers. Anyone, either buyers or sellers, who are not satisfied can make an initiative. However, the opposite party has to respond to their initiative and settle into equilibrium again. Case 1: - The movement can only reach equilibrium by responding to each initiative. If a failure occurs, it signals evidence of a big move in the direction of the initiative. As per the chart, whenever buyers have made an initiative to move outside of the value area, sellers have responded with supply pressure and vice versa. Case 2: - Buyers have made an initiative, but sellers couldn't hold back the buyers' pressure and ended up losing movement. Here, we can say that the buyers have given a breakout of the value area, and the sellers' response was a failure. 3) Shifting of the value area - Traders don't have to be upset after the breakout of the value area. Supply and demand will balance and unbalance again, and traders will get an opportunity to trade according to the theory. We all know of the tenet of the dow theory that "price tends to trend ." Value area also shifts its value after the breakout/breakdown, often in the direction of the trend. Uptrend: The price was in an uptrend. After the breakout of the first value area, it has formed the second, and so on. Downtrend: The price was in a downtrend. After the breakdown of the first value area, it has formed the second, and so on.
NASDAQ:QQQEducation
by Money_Dictators
9
Ascending Triangle on AUD/CAD @ H4This ascending triangle pattern has formed on the 4-hour chart of the AUD/CAD currency pair. It can be used as a short-term bullish breakout setup. The triangle's borders are marked with the yellow lines. My potential entry is marked with the cyan line (0.89235). My potential take-profit level is marked with the green line (0.90537). The stop-loss is to be set to the triangle's bottom point at 0.87643. Bearish breakouts from this continuation formation should be ignored.
Long
by AndriyMoraru
1