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Chart Patterns

As 'Above' so 'Below' - the harmony of natureIn this real world, there is various philosophy that tries to explain the "As above, so below" harmony is the great law of nature but none can prove this law hence it's still a hypothesis. The law of nature works on everything and the stock market is not untouched by nature. I am not here to give a lecture on this law of nature but to prove how this harmony of nature is preserved in the stock market and to share my research work on 'Stock-et' science which is equally difficult as 'Rocket' science. Many of you have heard of these famous patterns:- 'Head and Shoulder' 'Cup and Handle' 'Rounding Top/Bottom' 'Flag/Pennant' 'Double Top/Bottom' Do you all observe some correlation among them? They all are candlestick patterns that either decide reversal or continuation, if this was your observation then probably you are correct but I wasn't indicating this. Let me explain to you what kind of relationship I was talking about. How do we estimate the target of these patterns? To the target level, we first measure the depth of the pattern i.e. how deep it's below the breakout level. As its depth is below so will the height above. Now, I think you all can draw how this law of nature is respected here in the candlestick pattern or more precisely in the stock market. Let’s have an example to be more sound:- The above chart describes how the CUP pattern works following this law of nature. The stock after the breakout rallied non-stop to attain the e height of +94% which was the depth of the cup pattern. After attaining the target or say 'equilibrium' stock witnessed a jerk, not before that. This proves how the market preserves "As above, so below" harmony, the great law of nature. Still not convinced then look to another example, This is the vice-versa of the previously explained example, here stock attains the depth of -17% i.e. ' equilibrium' after forming a Head and Shoulder pattern with a height of shoulder +17%. This proves how the market preserves "As below, so above" harmony, the great law of nature. Now let's look at this concept with different dimensions i.e. dimensions of mathematics, physics, and chemistry. Don’t be afraid I'm not going to talk about 'rocket' science but 'stock-et' science. [list [ In math, we all have read negative and positive cancels out i.e. (-3+3=0) same in candlestick patterns if the stock has a pattern depth of then the pattern target would be +30% to attain '0' or say 'equilibrium'. In physics, we all have read that negative charges neutralize the positive charge to attain 'equilibrium' same in the stock market. In chemistry, we all have read that all chemical changes occur in nature to attain 'equilibrium' i.e. two elements share their electrons to attain 'stability' (H2O, here two hydrogen molecules share their 1 electron with 6 electrons of oxygen to attain equilibrium) this same happens in markets all market movements occur to attain 'stability'. Generally, people have fantasies about 'Rocket' science but we traders have fantasies about 'Stock-et' science. Please drop comments on whether you have a fantasy for any of the above science. Also, let me know how many of you believe that the stock market doesn't work on speculation but has its science let's call it 'Stock-et' science.
NSE:NIFTYEducation
by Chaser30
2
Circular patterns Publishing herewith my idea about circular patterns for education purpose i use these patterns in my everyday analysis and getting excellent results circular pattern helps me in finding the resistance and support levels in advance curve pattern is my friend i use it to find high growth trade and also a very quick trade up/down i mostly use it in 1 minute time frame to find a very fast trade, actually always in look for this pattern in every time frame OM VATS
BSE:RELIANCEEducation
by omvats1
Education About Bearish Rising WedgeHey there! Lets Learn About bearish rising wedge A bearish rising wedge is a chart pattern that often appears in the stock market and is seen as a bearish signal. It occurs when the price of a stock moves up and down, forming a wedge-like shape that is inclined upwards. The pattern is considered bearish because it signals that the stock's upward momentum is losing steam, and that there may be a price decline in the near future. The pattern is formed when the stock's high and low prices move closer together over time, creating the wedge shape. Investors and traders watch for this pattern as a sign that it may be time to sell their stock, or to short sell the stock, meaning to bet on a price decline. However, it's important to remember that a bearish rising wedge is not a guarantee of a price decline, and it's always wise to consider multiple indicators and factors before making any investment decisions. Here in my example as we can see s and p 500 is forming bearish market structure and forming lower highs and lower lows. In conclusion, a bearish rising wedge is a useful tool for investors and traders to keep an eye on, but it's only one of many factors that should be taken into consideration when making investment decisions like I used another indicator to confirm my analysis. So, keep an eye out for this pattern and stay informed, but always remember to do your own research and make informed decisions. Bye Have a nice day
SP:SPXEducation
by D3ffyDuck
Adani's Dead Cat Bounce: Navigating Volatility of the MarketsThe recent resurgence in Adani's stock price has been a source of fascination for many investors, as the company's shares have experienced a "V-shaped recovery" after a huge sell-off. This sudden increase in stock prices is commonly referred to as a "dead cat bounce," and it's a phenomenon that has been observed many times in the stock market. But what exactly is a dead cat bounce, and why does it occur? A dead cat bounce is a term used to describe a sudden and temporary increase in the price of a stock that has been declining for a long period of time. This phenomenon is often seen after a large sell-off, as investors who were previously bearish on the stock suddenly become optimistic and start buying shares again. This can cause a brief rebound in the stock's price, but it's important to note that this is typically a short-lived event, and the stock will soon resume its downward trajectory. So why does a dead cat bounce occur? There are a number of factors that can contribute to this phenomenon, including short-term market optimism, rumors of a takeover or merger, or a change in investor sentiment. In the case of Adani, the company's recent resurgence can be attributed to the Hindenburg Research fiasco, which saw the company's shares decline significantly in the face of negative rumors and allegations. However, after the dust settled, investors began to see the value in Adani's operations and started buying shares again. This sudden increase in demand for Adani's stock led to a rapid rebound in the company's stock price, and the company's shares have doubled in just one week. It's important to remember that a dead cat bounce is not a sign of a company's long-term health or prospects. Rather, it's a temporary phenomenon that occurs when investors become optimistic about a stock's future for a short period of time. In the case of Adani, the company's recent rebound in stock prices is a reminder that the stock market can be a fickle beast, and that it's important for investors to do their research and assess the long-term prospects of a company before investing. In conclusion, the recent resurgence in Adani's stock price is a classic example of a dead cat bounce. While it's tempting to get caught up in the excitement of a sudden increase in stock prices, it's important to remember that this is typically a short-lived event, and that a company's long-term prospects should be the focus of any investment decision.
NSE:ADANIENTEducation
by Kapil-Mittal
1
Trading Reverse Head & Shoulder PatternWhat is Reverse head & shoulder ? Ans:- The Reverse Head and Shoulders is a bullish reversal pattern that is formed in the stock market when an asset experiences a decline, followed by a moderate recovery, then another decline to a lower level, another recovery to near the original decline, and finally another decline to a level that is lower than the previous decline. The pattern is considered complete when the price rises above the neckline, which is the line connecting the highs of the two recoveries. The pattern is named after its visual appearance, which resembles the human head and shoulders, but in reverse. The three troughs form the shoulders and the head, while the neckline serves as the confirmation point for a reversal. The height of the pattern can be used to estimate the potential upside for the asset once the reversal is confirmed. The Reverse Head and Shoulders pattern is often seen as a positive sign for the market, indicating a potential end to the downtrend and a shift towards upward momentum. However, it is important to consider other factors such as market sentiment before making a trade based on this pattern. Now how to trade Reverse Head & shoulder pattern? Ans:- To trade this pattern we should follow:- Identifying the pattern: To trade the Reverse Head and Shoulders pattern, you first need to identify it on a stock chart. Look for three troughs followed by a neckline that connects the highs of the two recoveries. Confirming the pattern: Once the pattern is identified, you need to confirm it by waiting for the price to rise above the neckline. This is considered the confirmation point and signals the start of a potential upward trend. Setting a target price: The height of the pattern can be used to estimate the potential upside for the asset. Measure the distance between the neckline and the lowest trough and add it to the neckline to determine a target price. Placing a trade: Once the pattern is confirmed and the target price is set, you can place a long (buy) trade. It is recommended to use a stop loss order to protect your trade in case the pattern does not play out as expected. Monitoring the trade: After placing the trade, it is important to monitor the stock price and adjust your stop loss if necessary. Close the trade once the target price is reached or if the stock price drops below the neckline, indicating a potential reversal. It is important to keep in mind that no single pattern or indicator can guarantee success in the stock market. It is also recommended to consider other factors such as market sentiment and technical indicators before making a trade based on the Reverse Head and Shoulders pattern. Pros: Sign of a potential trend reversal: The Reverse Head and Shoulders pattern is often seen as a positive sign for the market, indicating a potential end to the downtrend and a shift towards upward momentum. Estimation of potential upside: The height of the pattern can be used to estimate the potential upside for the asset, allowing traders to set realistic targets and determine their risk-reward ratio. Relatively easy to identify: The Reverse Head and Shoulders pattern is relatively easy to identify and does not require complex analysis, making it accessible to traders of all levels. Con: No guarantee of success: No single pattern or indicator can guarantee success in the stock market, and the Reverse Head and Shoulders pattern is no exception. The pattern can be disrupted by external factors such as market sentiment, economic data releases, and geopolitical events. False signals: The pattern is not always reliable, and false signals can occur if the price does not rise above the neckline or if the trend does not continue as expected. Need for confirmation: The pattern is not considered complete until the price rises above the neckline, and traders must wait for this confirmation point before entering a trade. This can lead to missed opportunities or increased risk if the pattern does not play out as expected. In conclusion, The Reverse Head and Shoulders pattern is a bullish reversal pattern in the stock market that is formed by a series of declines and recoveries and, but it should not be relied upon exclusively. It is important to consider other factors and to always manage risk when trading based on this pattern.
NSE:BANKNIFTYEducation
by pn202377
Educational post Rising WedgeA Rising Wedge is a chart pattern in technical analysis that is formed when price moves in a diagonal upwards trend, with both trendlines converging. This pattern is considered bearish because it signals a potential reversal of the current uptrend. As the pattern progresses, the price movement becomes more and more confined, which often results in a downward breakout. This downward move signals a potential trend reversal, and traders often view it as a selling opportunity.
Education
by nawaab001
2
123 Reversal Bearish Pattern TradingSetup The 123-chart pattern is a three-wave formation, where every move reaches a pivot point. This is where the name of the pattern comes from, the 1-2-3 pivot points. The structure of 123 chart pattern The pattern appears after three price movements, which form three pivot points and a confirmation level. Pivot point 1. This is a turning point that the price formed during the trend. If a price breaks the previous trendline after it formed pivot point 1, the pattern will be more reliable. Pivot point 2. The next turning point is very likely to form outside of the previous trendline or channel. This is a good indication that the trend might be ready to end and reverse. Pivot point 3. Pivot point 3 is crucial for 123 reversal chart patterns. The point must not exceed the pivot point 1 (in the worst case it might be on the same level) for the pattern to be valid. Confirmation level The confirmation level is our entry point in the market. It is located at the same level as pivot point 2. When price breaks through this level open the trade. Target level To set the target trader needs to connect 1 and 3 pivot points with a line. The size of your 123 pattern equals the vertical distance between Line 2 (which is a horizontal line at the level of 2 pivot point) and the midpoint of Line 1. 123 chart pattern stop loss setup It is highly important to use stop loss when trading the 123 chart pattern. The stop loss should be set under pivot point 3 in the bullish trend reversal, and above in the bearish one. In the condition of high market volatility, the price might get pushed beyond the 2 pivot point for a while. That’s why it will be a good idea to set stop-loss slightly beyond the 3 pivot point, as this will prevent stop loss from being activated.
NSE:RELIANCEEducation
by SPTradingDesk
123 Reversal Pattern Trading23 reversal setup is a basic on-chart formation, that warns about upcoming trend reversal. Setup The 123-chart pattern is a three-wave formation, where every move reaches a pivot point. This is where the name of the pattern comes from, the 1-2-3 pivot points. 123 pattern works in both directions. In the first case, a bullish trend turns into a bearish one. And the second picture presents the opposite, a bearish trend turns into a bullish one. The structure of 123 chart pattern The pattern appears after three price movements, which form three pivot points and a confirmation level. Pivot point 1. This is a turning point that the price formed during the trend. If a price breaks the previous trendline after it formed pivot point 1, the pattern will be more reliable. Pivot point 2. The next turning point is very likely to form outside of the previous trendline or channel. This is a good indication that the trend might be ready to end and reverse. Pivot point 3. Pivot point 3 is crucial for 123 reversal chart patterns. The point must not exceed the pivot point 1 (in the worst case it might be on the same level) for the pattern to be valid. Confirmation level The confirmation level is our entry point in the market. It is located at the same level as pivot point 2. When price breaks through this level open the trade. Target level To set the target trader needs to connect 1 and 3 pivot points with a line. The size of your 123 pattern equals the vertical distance between Line 2 (which is a horizontal line at the level of 2 pivot point) and the midpoint of Line 1. 123 chart pattern stop loss setup It is highly important to use stop loss when trading the 123 chart pattern. The stop loss should be set under pivot point 3 in the bullish trend reversal, and above in the bearish one. In the condition of high market volatility, the price might get pushed beyond the 2 pivot point for a while. That’s why it will be a good idea to set stop-loss slightly beyond the 3 pivot point, as this will prevent stop loss from being activated. The target level of 123 continuation pattern The target of the “continuation 123 pattern” measures the same way as usual. The only exception is that in this case, you should take pivot point 3 as a starting one of your target.
NSE:RELIANCEEducation
by SPTradingDesk
Concept Volume: How to plan your trade with help of volumeConcept Volume: (1): We have got a clear uptrend till now (pls check the example shared) until a good volume (red) candle comes out of nowhere, as mentioned - (1). This is the first sign of weakness in the trend, long positions need to be trailed after that, one should avoid creating long positions. & high of this zone could be monitored serious turning point zone. Here, in Aarti Industries we have seen a clear breakout. Though the trend is intact & till now we have only encountered a single speed breaker, we should consider this as a sign of caution. (2): candle completed the week of 4th Oct. 21, is the blow-off top. After the big move-up, we have got an extremely low volume Doji. How could be possible to have a Doji after a good move-up? (acceleration than a pause in the momentum) (3) After approaching again at the psychological resistance, this got rejected forming an engulfing. But before this why this reversal happened let us find it. Check the following candle- 18 Oct 21: good volume spread & good volume candle, 25 Oct 21: low volume spread & low volume candle, why? If the trend is intact it should not happen 1 Nov 21: a Doji-type candle with ultra-low volume. Are bears no more interested in taking the stock further down? 15 Nov 21: First avg. volume green candle after 5 red candles. High is marked as a psychological resistance. Now, check 28 Feb candle, it has finally broken the support (maximum traders enter here, considering the good opportunity to go short & it is ideally a good one but if entered, it has tested the patience) also, check how could be possible that this breakout candle has a low volume than the last one, in the trend? All of this is basically an anomaly. From here, the trend got reversed making 5 green candles that retraced the red ones till their resistance level as mentioned (4). From 11 April 22 we have got 5 candles, in the trend and aligned with the volume Now, if you notice the three candles formed after 30 May 22, you see the pattern is not aligned with the volume (the market is going down but the volume is decreasing along with the size of the candle---AN ANAMOLY) CASE STUDY (aarti industries)
NSE:AARTIINDEducation
by ShubhamKatiyar
4
Interpretation Of Chart Patterns According To Market Phase.NSE:BANKNIFTY1! As we all know market moves in phases What are those phases? A primary bull or bear trend consists of two phases, specifically Accumulation phase: if the market rises after consolidating, we say that the consolidation represents accumulation (buying activity). Distribution phase: if the market declines after consolidating, we say that the consolidation represents distribution (selling activity) The main issue arises when a trader tries to know whether this consolidation is accumulation or distribution. So how can we overcome that issue? As a trader, we have to try to look for evidence that suggests whether accumulation or distribution is taking place during consolidation and out of that evidence we will discuss how we can use chart patterns to identify the phase. Chart patterns belong to one of two groups, that is, reversal or continuation. Chart patterns have intrinsic and extrinsic biases. What is the intrinsic bias of chart patterns? Intrinsic bias means the inherent bullish or bearish sentiment associated with a chart pattern. For example,1. An ascending triangle pattern has an inherently bullish bias. 2. A head and shoulder pattern has an inherently bearish bias. 3. A descending triangle pattern has an inherently bearish bias. ## A symmetrical triangle and rectangle/horizontal range pattern have an intrinsically neutral bias What is the extrinsic bias of chart patterns? Extrinsic bias refers to as location-based sentiment of a chart pattern. Like a pattern forming at some location which is historically a strong resistance zone (Market top) so if an ascending triangle forms at that location then its extrinsic bias will be bearish. Example 1: An descending triangle is an intrinsically bearish pattern, but if it is forming at a strong support location then the extrinsic bias will be bullish. Example 2: An ascending triangle is intrinsically bullish, that is, it has a bullish bias. Regardless of where this pattern occurs with respect to past price action, it will always be inherently a bullish indication, but If this bullish pattern is found at the price level of some historically significant market top/Resistance, then we say that it is extrinsically bearish, cause the pattern is located at a significant resistance. Factors determining the extrinsic bias of the pattern • Direction of the preceding trend. • Location with respect to historical extremes in price. • Location with respect to the phase of an underlying market cycle • Location with respect to other support and resistance barriers to price. • Bullish or bearish divergent formations. How can we use this extrinsic and intrinsic bias? When extrinsic bias and intrinsic bias both are in agreement then the possibility of a reversal at market tops or bottoms is significant. Similarly, for trends, when the intrinsic bias of the chart pattern is in agreement with the directionality of the trend, i.e., the trend sentiment, the potential for a continuation is usually greater. For example, The inverse head and shoulder pattern have an intrinsically bullish bias, and it is also forming at a strong support location then its extrinsic bias is also bullish. Like, If both are in alignment then we can say that this is an accumulation phase and a long entry can be initiated. ##When attempting to determine the reliability of potential reversals during the accumulation and distribution phases, or continuations during the trend phase, it is important to look for agreement between the intrinsic and extrinsic biases. If Any disagreement is seen as an indication that a reversal or continuation may be inherently weak. ##Intrinsically neutral formations, their extrinsic bias or sentiment is derived from the trend sentiment. For example, a symmetrical triangle will adopt an extrinsically bullish bias in an uptrend and an extrinsically bearish bias in a downtrend. By considering these Factors while trading chart patterns in different market phases will give an in-depth insight and helps in making more informed and rational decisions. I hope you found this helpful. Please like and comment. Keep Learning, Happy Trading!
NSE:BANKNIFTYEducation
by SANJAYPATIDAR_
79
Structural Confluence of Elliot and HarmonicsConfluence doesnt mean some indicators and price action .. confluence conditions can be seen everywhere from structure to entry The above structure shows you confluence with 2 major concepts in trading world HARMONICS and ELLIOT, shows you the possible areas where you could see confluence of both The 3rd wave could some times be BAT pattern or DEEP CRAB pattern in impulse, when it comes to elliot correction you will prob'ly see ABCD pattern in formation. This will give you an idea of how to identify the confluence when you are looking for swing trading Always keep in mind that there will be internal small patterns within the big pattern do not get confused while doing multi TF analysis thinking which pattern to follow, always follow the higher TF pattern.
NSE:BANKNIFTYEducation
by TeamTaurus
3