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Trading Chart Patterns

The document outlines key candlestick and chart patterns used in technical analysis for trading. It details bullish and bearish candlestick patterns, as well as various chart formations like head and shoulders, double tops, and triangles that signal potential market movements. Understanding these patterns can help traders identify potential reversals or continuations in trends.

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52 views2 pages

Trading Chart Patterns

The document outlines key candlestick and chart patterns used in technical analysis for trading. It details bullish and bearish candlestick patterns, as well as various chart formations like head and shoulders, double tops, and triangles that signal potential market movements. Understanding these patterns can help traders identify potential reversals or continuations in trends.

Uploaded by

vanshbansiwal9
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Trading Chart Patterns

1. Candlestick Patterns

Candlestick patterns are crucial for technical analysis in trading. They represent price movements

and can indicate potential reversals or continuations in trends. Here are some key patterns:

Bullish Patterns:

- Hammer: Indicates a potential reversal to an upward trend.

- Inverted Hammer: Suggests bullish reversal after a downtrend.

- Bullish Engulfing: A large bullish candle completely engulfs the previous bearish candle.

- Morning Star: A three-candle pattern signaling a reversal to the upside.

Bearish Patterns:

- Shooting Star: Signals a potential reversal to a downtrend.

- Bearish Engulfing: A large bearish candle engulfs the previous bullish candle.

- Evening Star: A three-candle pattern signaling a reversal to the downside.

- Dark Cloud Cover: A bearish candle opens above the previous bullish close and closes below its

midpoint.

Doji Patterns:

- Doji: Represents market indecision and can indicate potential reversals depending on context.

- Dragonfly Doji: Suggests a bullish reversal.

- Gravestone Doji: Suggests a bearish reversal.

2. Chart Patterns

Chart patterns are formations within price charts that signal potential future movements. Here are

some common patterns:


- Head and Shoulders: Indicates a reversal, with a 'head' peak between two smaller 'shoulder'

peaks.

- Double Top: A bearish reversal pattern with two peaks at a similar level.

- Double Bottom: A bullish reversal pattern with two troughs at a similar level.

- Triangles:

- Symmetrical Triangle: Indicates a continuation; breakout direction can vary.

- Ascending Triangle: A bullish continuation pattern with higher lows and a horizontal resistance

line.

- Descending Triangle: A bearish continuation pattern with lower highs and a horizontal support

line.

- Flags and Pennants: Continuation patterns that indicate a short consolidation before the trend

resumes.

- Cup and Handle: A bullish continuation pattern resembling a teacup, followed by a smaller

consolidation phase (the handle).

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