Price Patterns

What are Price Patterns?

A cumulative movements of stock prices to

form distinctive pattern on a chart

It helps the traders to predict the future price

movement of a stock with potential targets
 Types of Price Pattern

Reversal Pattern Continuation Pattern

It signals a change in the current
After a brief pause in an ongoing
trend.
Larger time frames have a higher trend, the prior trend resumes.
impact. It signals a temporary consolidation
Topping patterns are usually shorter in stock price.
& more volatile, whereas bottom Formation on low volumes.
formation takes longer time. E.g: Triangles, flags, pennants, and
E.g: Head & Shoulders, Double Top &
rectangles
Bottom.
 Reversal Patterns

Bullish Bearish
Reversal Reversal

Head & Shoulders

Inverse Head & Shoulders

Double Top & Double Bottom

Triple Top & Triple Bottom

Head & Shoulders
It is a bearish reversal pattern.

It consists of three parts: a peak to

the left (shoulder), a higher peak
(head) and another peak to the right
(shoulder).

The "neckline" is formed by joining the

bottoms of shoulder and head.

Breakdown of neckline supported with

volumes signals trend change.

The price target is usually the

distance between head & neckline.
Pattern: Head & Shoulders
Script : Bank Nifty Futures
Time Frame : Daily

Breakdown
Inverse Head & Shoulders

It is a bullish reversal Pattern

When the price breaks above the

neckline, the trend changes to bullish.

Breakout of neckline supported with

volumes signals trend change.

Higher the time frame greater is the

impact.
Pattern: Inverse H&S
Script: Nifty 50 Futures
Time Frame: Weekly

Breakout
Double Top & Double Bottom
Double Top
It represents two failed price attempts to
break beyond either a key resistance level
or below a key support level.

A double bottom is a bullish reversal pattern

and looks like a W

A double top is a bearish reversal pattern

and looks like a M

Higher Volume while breaking out confirms

the trend reversal.

Breakout can be also accompanied by a

price gap

Double Bottom
Pattern: Double Bottom
Script : Bank Nifty Futures
Time Frame : Daily

1 2 Breakout
Pattern: Double Top
Script: Nifty 50 Futures
Time Frame: 2 hours

1 2

Breakout
Triple Top & Triple Bottom Triple Top

It represents three failed price

attempts to break beyond either a
key resistance level or below a key
support level.

A triple bottom is a bullish reversal

pattern.

A triple top is a bearish reversal

pattern.

Triple Bottom
Pattern: Triple Top
Script: TITAN
Time Frame: Weekly
1 2 3
1
Breakout
Pattern: Triple Bottom
Script: Nifty 50 Futures
Time Frame: 2 hours

Breakout

1 2 3
Types of Continuation Patterns

Rectangles
Triangles
Flags
Pennants
Rectangle
A rectangle continuation pattern is the most easily recognized
continuation pattern and is recognized by price action bounded by
parallel support and resistance lines.

It can be bullish or bearish and are also known as trading ranges or

consolidation zones.

Bullish Rectangle Bearish Rectangle

Pattern: Bullish Rectangle
Script: Nifty 50 Futures
Time Frame: Daily
Pattern: Bearish Rectangle
Script: Bank Nifty Futures
Time Frame: 3 hours
Triangles

A price pattern that includes two converging trendlines.

It is a consolidation to the prior trend & volume dips during the pattern

formation.

Price breakouts from the 2/3rd length of the triangle.

Price target is generally calculated as 1/2 base of the triangle from the

breakout.

Price breakout with higher volume is more impactful.

 Types of Triangles

Ascending triangle Descending triangle Symmetrical triangle

Pattern: Ascending Triangle
Script: Nifty 50 Futures
Time Frame: Daily

Breakout
Pattern: Descending Triangle
Script: Bank Nifty
Time Frame: 3 hours

Breakout
Pattern: Symmetrical Triangle
Script: Nifty 50 Futures
Time Fame: Daily

Breakout
Pattern: Symmetrical Triangle
Script: Nifty 50 Futures
Time Frame: Daily

Breakout
Flags

It is formed by two parallel trendlines.

It is a consolidation of the prior trend & volume remains low during the formation of

the pattern.

On average, there are only 15-20 candles during the formation of the pattern.

Smaller the time frame stronger the impact of the pattern.

Price breakout with high volume is more impactful.

 Types of Flags

Upward Sloping Flag Downward Sloping Flag

Pattern: Upward Sloping Flag
Script: Vedanta
Time Frame: Daily

Breakout

Target
Pattern: Downward Sloping Flag
Script: BAJAJ FINANCE
Time Frame: Daily

Target

Breakout
Pennants
Powerful Continuation pattern
Indicates temeroray halt in momentum after a good rally
Similar to a symmetric triangle pattern but time taken is lesser. ( 15 - 20 Candles )

Pennant
Pennant
Pattern: Pennant
Script: Nifty 50 Futures
Time Frame: Daily

Breakout
Some more price patterns

There are a few more price patterns that cannot be

categorized, such as Cup & Handle and Wedges.

These price patterns can be formed both as a continuation

pattern or reversal pattern.
Wedges
A wedge pattern represents two converging trendlines where price consolidates.
It signals a pause in the current trend.
They are usually skewed triangles.
Wedges can be of two types: Rising Wedge & Falling Wedge.
A rising wedge is a bearish pattern with lines sloping up that appears in a downward trend.
A falling wedge is a bullish chart pattern with downward sloping lines that appears in an
upward trend.
Pattern: Rising Wedge
Script: Bank Nifty Futures
Time Frame: Weekly

Breakout
Pattern: Falling Wedge
Script: BAJAJ FINANCE
Time Frame: Daily

Breakout
Rounding Bottom
A rounding bottom on a price chart
represents the shape of cup or the letter "U".
It can be formed as a continuation pattern
as well as a reversal pattern.
It starts with a sharp decline followed by a
consolidation forming a bottom & finally a
sharp recovery.
Price & volume usually moves in tandem,
where high volume activity confirms the
trend.
The depth of a rounding bottom is added to
the breakout point to calculate the price
target.
Pattern: Rounding Bottom
Script: ADANI TRASNMISSON
Time Frame: Daily

Target

Breakout
Cup & Handle
A cup and handle is a bullish price
pattern that resembles a U-shaped,
denoted as Cup & a horizontal price
channel is denoted as the handle.
The handle resembles a pullback which
is generally not more than 1/3rd of the
size of the prior advance.
Can be a reversal or continuation
pattern.
The target can be figured out from the
height of the Cup and then added to the
breakout point of the handle.
Pattern: Cup & Handle
Script: Bank Nifty Futures
Time Frame: Weekly

Breakout
Target
Script: Bank Nifty
Time Frame: 2 hours

Head & Shoulders

Double Top

1 2
Descending triangle
Rectangle

Ascending triangle
Inverse Head & Shoulders
https://www.youtube.com/VivekBajaj