“Price Patterns Identification

 > Explanatory Article by Marios Kyriakou, MSc Economics


About the author: Marios Kyriakou has a bachelor’s degree in Economics from the University of Cyprus and a master’s degree in Economics from the University of Warwick. He is also a holder of CySEC’s Advanced Certificate in Financial Services Legal Framework and a professional in Online Trading, Forex and CFDs with more than 7 years of experience.

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<Last updated 25.04.2020>

Dear reader,

Hi! If you are interested in online trading and technical analysis please read carefully the below article that shows the patterns observed in the historical time series of prices.

 

Technicians look for many patterns in the historical time series of prices. These patterns are reputed to provide information regarding the size and timing of subsequent price moves.

Some say these patterns are illusions, and have no real meaning.  In fact, they can be seen in a randomly generated price series.

 

Head and Shoulders

This formation is characterized by two small peaks on either side of a larger peak. This is a reversal pattern, meaning that it signifies a change in the trend.

Head and Shoulders Pattern is most often seen in uptrends. You can see that once the price goes below the neckline it makes a move that is at least the size of the distance between the head and the neckline.

Inverse Head and Shoulders-

Measure the distance between the head and the neckline, and that is approximately the distance that the price will move after it breaks the neckline.

 

Triangles

Triangles are continuation formations. Typically, triangles should break out about half to three-quarters of the way through the formation.

Ascending
Descending
Symmetrical

Example: Ascending triangle

 

Trading Wedges

Signal a pause in the current trend. When you encounter this formation, it signals that traders are still deciding where to take the pair next. A rising wedge is formed when price consolidates (brings together-forms) between upward sloping support and resistance lines. See in this picture how price broke down to the downside.

The price broke to the downside and the downtrend continued. That’s called a continuation signal.

Trade Bearish and Bullish Pennants

The price usually consolidates and forms a tiny symmetrical triangle, which is called a pennant.

 

Trading Breakouts


 

“I hope I am clear on this one. If not, contact us on social media and we will do our best to help you.

Thank you for reading my articles and watching my videos.”

Marios Kyriakou

Disclaimer: This article is intended for educational purposes only and does not replace independent professional judgement. Its purpose is to act as a complementary educational service to society, promoting personal development and social, economic and cultural progress of citizens. While this content has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by the creator to the accuracy or completeness of the information presented or any other written or oral information made available to any interested party and any such liability is expressly disclaimed.
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