What is Rounding Bottom?

The rounding bottom is a reversal chart pattern, which develops after a price decline. When it is graphed, it forms a U Shape. Rounding bottoms are found at the end of extended downward trends and signify a reversal in long-term price movements.

Continue reading “The Series of Chart Patterns Chapter 15: “Rounding Bottom”

What is Cup & Handle chart pattern?

A Cup and Handle can be used as an entry pattern for the continuation of an established bullish trend. It´s one of the easiest patterns to identify. The cup has a soft U-shape, retraces the prior move for about ⅓ and looks like a bowl. After forming the cup, price pulls back to about ⅓ of the cups advance, forming the handle. The full pattern is complete when price breaks out of this consolidation in the direction of the cups advance.

Continue reading “The Series of Chart Patterns Chapter 14: “Cup & Handle””

What are Gaps?

Gaps occur when there is an empty space between two trading periods that are caused by a significant increase/decrease in price; i.e. current open is not the same as prior closing price. E.g. A stock might close at INR 500 and open at INR 510 after positive earnings. This is called as Gap-up. There are three main types of Gaps: 1) Break away 2) Run away 3) Exhaustion

Continue reading “The Series of Chart Patterns Chapter 13: “Gaps””

What is Flag chart pattern?

Pennants are chart patterns, formed by price action, that is contained within a small symmetrical triangle. This is created when there’s a minor profit booking, in either an uptrend or a downtrend.

Continue reading “The Series of Chart Patterns Chapter 12: “Pennant Pattern””