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Monday, August 6

Notes on Reading Stock Chart

Regular Chart Patterns - Learn them

Please note: I am not a financial advisor, take all you read here with a grain of salt.

Head and Shoulders - picture
Signals that the price will make a downward move after having moved up in past periods.

Inverse Head and Shoulder signals the opposite

Cup and Handle - picture

Signals that the price will continue in an upward direction after the handle after having moved down in past periods.

Pattern should be a nicely rounded formation, similar to a semi-circle.

The valley should be between one-third and two-thirds the size of the previous upward movement

Double Top, Double Bottom - picture
Sometimes called "Twin Peaks"

Double Top (M) - Signals a downward direction change after moving up in past periods

Double Bottom (W) - Signals an updated direction change after moving down in past periods

Symmetrical Triangle - picture

Signals a consolidation to a given price. Once consolidated it may move in original direction, but it can go in the opposite direction.

Ascending Triangle - picture

Triangle shape, the top of the triangle will be straight. Each "side" of the triangle should be "tested"/"touched" multiple times.

Signals the price is to take an upward direction.

The optimum point to get in on this is right before it moves above the top of the triangle.

Descending Triangle signals the exact opposite.

Wedge - picture
Looks a lot like the symmetrical triangles, however they tend to last over longer periods of time.

Good Question: What's the difference between a wedge and a triangle

Gap - picture
A gap doesn't signify much as far as price trending, other then drastic changes in price.

Triple Top - picture
Trend has to test the same limit 3 times

Trend has to fall to the same support 2 times

Each test of limit will be marked with declining volume

Signals a downward direction

Triple Bottom - picture
Trend has to test the same limit 3 times

Trend has to fall to the same support 3 times

Signals an upward direction

Be careful as this looks just like Triple Top but signals an upward trend.




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