One of the most significant advantages of analyzing chart patterns is that they can usually tell us the possibility of the stock movement (continuation chart pattern or reversal chart pattern). Continuation Pattern Different Types of Continuation Patterns When a continuation pattern (example flag pattern) is formed after a downtrend, it indicates that consolidation is over and not stock is ready to fall further now. When a continuation pattern (example flag pattern) is formed after an uptrend, it indicates that consolidation is over and not stock is ready to continue its original uptrend. These are also called consolidation patterns because they determine how traders take a quick break before moving further in the same path as the previous trend.Ĭontinuation patterns can be bullish as well as bearish. After an uptrend when triple top is formed, price reverses from there and goes into downtrend Reversal Pattern Reversal Patterns Different types of Reversal PatternsĬontinuation chart patterns indicate that the market trend will be continued once the pattern is finished. If you notice a reversal chart pattern when the market moves in a downtrend, it means that the stock share price will start moving upwards.Įxample of a reversal pattern is the triple top Pattern. To understand easily, if you recognize a reversal chart pattern when the market moves in an uptrend, it probably implies that the stock price will start moving downwards. It indicates that a market trend will reverse once the pattern is finished. It’s not complicated to figure out the reversal pattern. There are two main types of chart patterns that you are likely to know: Reversal, continuation pattern. We are not going to discuss all the chart patterns on this page because it is an introduction, but let me help you to know what is Continuation Pattern and reversal pattern. Together they help to build a chart pattern. The shareholder’s buying and selling are shown in stock charts. Just like a doctor that studies the patient’s medical report and concludes the problem of the patient, in the same way, the trader will use chart patterns to know the market movement. One of the main reasons for traders to use chart patterns is to find out what the various market shareholders are doing. These chart patterns can occur in any time frame such as intraday, monthly, weekly, and etc. The target price is given by the highest point that resulted in the formation of the wedge.There are two broad categories of a chart pattern.Ībove two types can be further classified into bullish and bearish sub types The movement then has almost no selling power which indicates the willingness of a bullish reversal. Volumes are then at their lowest and gradually decrease as the waves. A second wave is formed thereafter but prices will decrease less and less at the contact with the resistance. A second wave of decrease will then occur, but with lower amplitude, which make appear the weakness of sellers. The highest reaches during the first correction on the support of the wedge will form the resistance. This one is characterized by a progressive reduction of the amplitude of the waves. This pattern marks the shortness of sellers. Each line must be touched at least twice for validation. To confirm a falling wedge, there must have oscillation between the two lines. The falling wedge is a bullish reversal pattern formed by two converging downward slants. The target price is given by the lowest point that resulted in the formation of the wedge. The movement then has almost no buying power which indicates the willingness of a bearish reversal. A second wave is formed thereafter but prices will increase less and less at the contact with the support.

A second wave of increase will then occur, but with lower amplitude, which make appear the weakness of buyers. The lowest reaches during the first correction on the resistance of the wedge will form the support. This pattern marks the shortness of buyers. To confirm a rising wedge, there must have oscillation between the two lines. The rising wedge is a bearish reversal pattern formed by two converging upward slants. The wedge is drawn with the last fractals detected on charts (lookback = 10 periods in the past). When the pattern occurs, it can be interpreted as a trend reversal or continuation pattern and can help traders find trading opportunities. This screener can detect wedge patterns : rising, falling and symmetrical ones. The falling wedge is a bullish chart pattern that signals a buying opportunity after a downward trend or mark correction.

Falling wedge pattern on options chart