Chartstick Patterns

Chart patterns are visual representation of price movements over a period of time. Traders use these patterns to predict market direction, sothat they can make rational, sound decision. and these patterns can give traders clues about what might happen next with stock price.

Before understanding these following chart patterns it’s important to make you understand about ” SUPPORT AND RESISTANCE LEVELS”

In general a support level representations a price point where a stock tends to find buying interest, and preventing it falling more. in other words it is the level where investors believe the stock is undervalued and start buying. Creating demand and causing the price bounce back.

On the other hand, in resistance level price of stock tends to go its higher and stop rising more, as there are many sellers, making it difficult for the price to go higher.

Eventually we can say it is completely “DEMAND AND SUPPLY’ concept.

Here are some commonly seeing chart patterns

• • Head and Shoulder

• • Inverse head and shoulder patterns

• • Cup and Handle

• • Rounding Bottom

• • Rounding Top

• • Double Bottom

• • Double Top

• • Morning star and Evening star

• • Ascending Triangle

• • Descending Triangle

• Symmetrical Triangle

Inverse head and shoulder 

Cup and Handle    This pattern resembles a tea cup with its handle. it is the bullish continuation pattern, where the price forms a rounded bottom (the cup), followed by a small consolidation (the handle) before breaking out to the upside.

Rounding Bottom      Also known as a saucer bottom, this pattern forms a long- term reversal signal, it consists of a gradual downward trend followed by rounded bottom, and a subsquent upward trend. it suggests a shift from a downtrend to an uptrend as buying pressure gradually overcomes selling pressure.

Round Top      It is a reversal pattern designed to identify the end of an uptrend and the beginning of a potential downtrend.