NATURAL GAS (THE - W CHART PATTERN ) #CLASSIC UPCOMING WEEK
The W pattern, also known as the double bottom pattern, is a bullish reversal pattern that signals a potential change from a downtrend to an uptrend. Here’s a concise overview:
W Pattern (Double Bottom)
Definition: The W pattern forms when a stock’s price makes two distinct lows, separated by a peak in between, resembling the letter “W” on the chart12.
Components:
First Bottom: The price declines to a low point, indicating the end of the current downtrend.
Middle Peak: The price then rises to a resistance level, forming the middle peak.
Second Bottom: The price declines again, but this time to a higher low or the same level as the first bottom.
Breakout: The pattern is confirmed when the price breaks above the middle peak with increased volume12.
Trading the W Pattern
Identify the Pattern: Look for two distinct lows with a peak in between.
Volume Confirmation: Ensure the breakout above the middle peak is accompanied by high volume.
Entry Point: Enter the trade when the price breaks above the middle peak.
Stop-Loss: Place a stop-loss below the second bottom to manage risk.
Target Price: Set a target price based on the height of the pattern (distance between the bottoms and the peak) added to the breakout point23.
W Pattern (Double Bottom)
Definition: The W pattern forms when a stock’s price makes two distinct lows, separated by a peak in between, resembling the letter “W” on the chart12.
Components:
First Bottom: The price declines to a low point, indicating the end of the current downtrend.
Middle Peak: The price then rises to a resistance level, forming the middle peak.
Second Bottom: The price declines again, but this time to a higher low or the same level as the first bottom.
Breakout: The pattern is confirmed when the price breaks above the middle peak with increased volume12.
Trading the W Pattern
Identify the Pattern: Look for two distinct lows with a peak in between.
Volume Confirmation: Ensure the breakout above the middle peak is accompanied by high volume.
Entry Point: Enter the trade when the price breaks above the middle peak.
Stop-Loss: Place a stop-loss below the second bottom to manage risk.
Target Price: Set a target price based on the height of the pattern (distance between the bottoms and the peak) added to the breakout point23.
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