What are chart patterns and how to use them?

1. What are chart patterns and how to use them? TradingView is a platform where you can analyze and understand charts and interact with other traders and their investment ideas. TradingView offers you the largest library of ideas and strategies, with over 100,000 strategies written by other traders and members of the community. the members share their ideas and scripts, on the TradingView market. (Read more) Financial Blogs Just like harmonic patterns, chart patterns are also building blocks of technical analysis the charts are repetitive in the market. These charts can help you project the next price movements in market. There are 3 types of patterns: •depending on how price is likely to behave after completion •reversal patterns, where price is likely to reverse,and

2. •continuation patterns, where price is likely to continue its course and bilateral patterns,price can go either way, depending on whether it breaks to the upside or to the downside. Double Top or Bottom Double top is a reliable reversal pattern that allows you to enter in a bearish position after a bullish trend. The neckline is created by two tops at the same level with a valley in between. the double bottom is the reverse version of double top. It is a bullish version tat forms after a downtrend. If the Price breaks the neckline and closies below it, the pattern will complete. Head and Shoulders If you wish to enter a bearish position after a bullish trend, head and shoulders is a reversal pattern that allows you to do that. Unlike double top/bottom it consists of three top and one of wich is a higher high in the middle. This higher high is called ‘’head’’. For the last top the height can be higher than the first top but not higher than the head. The pattern is considered completed, if the price breaks the neckline and closes below it. Wedge A continuation pattern or a reversal pattern, wedge patterns are of two types, •rising wedges : the lows climb faster than the highs. Price is contained by 2 ascending lines that converge. These wedges tend to break downwards.

3. •Falling wedges: The upper trend line is steeper than the lower trend line, thus the two ascending lines converge. Contrary to rising wedges, the highs fall faster than the lows. These wedges tend to break upwards. Cup and Handle As the name suggests this pattern takes the shape of a cup and handle with price movements. With a prominent shape this pattern is very easy to identify. The cup has a soft U-shape, retraces the prior move for about ⅓. The handle is formed when price pulls back to about ⅓ of the cup’s advance. Flag Used as an entry pattern for established trends, the pattern usually forms in the middle of a full swing. It is called flag because it is formed after a strong trending move known as mast of the flag. Bullish flags are formed after an uprend and bearish trend forms after a downtrend. Pennant Pennant is used as an entry pattern for an already established trend. A small triangle contains the price. The mast of the pennant is determined by a sharp price movement that may contain gaps. This triangle is wide at first but then it converges to a point according to how pattern develops. You can extend the length of the mast towards the direction of breakout. Uptrend is formed with bullish pennants and downtrend is formed with bearish triangle. Rectangle

4. Similar to Pennant, Rectangles are also used as an entry pattern for an already existing trend. The pattern is formed when a sharp price movement takes place and the price falls in consolidation with 2 horizontal support and resistance levels. Uptrend is formed with bullish rectangle and downtrend is formed with bearish rectangle. Parallel Channel A channel is formed by two parallel lines each being tested at least twice, and is used as an entry pattern in an already establised trend. Ascending channel- this type of channel indiates bullish trend, the support line connects consecutive higher lows and the resistance line connects consecutive higher highs. Usually,support line is a buy zone. Desceding channel- indicates a bearish trend, the support line connects consecutive lower lows and the resistance line connects consecutive lower highs. Usually resistane line is sell zone. Pitchforks Pitchforks has three key elements to it, 2 outside parallel lines for providing support and resistance and a median line in between them. You can use pitchforks to identify buy and sell call opportunities at those lines. TradingView has smart drawing tools for all of these techniques and there is a popular chat where you can share pitchfork- based ideas. Triangle Also kows as bilateral pattern, indicating that the trend will either continue or reverse after a breakout. There are three types of triangles,

5. •symmetrical-price is contained by 2 converging trend lines with a similar slope •ascending -price is contained by a horizontal trend line acting as resistance and an ascending trend line acting as support •Descending- price is contained by a horizontal trend line acting as support and a descending trend line acting as resistance. Read More: Fundamental tips you need to know to become an investor