<Last updated 25.04.2020>
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 are continuation formations. Typically, triangles should break out about half to three-quarters of the way through the formation.
Example: Ascending triangle
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.
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