Chart Patterns

Video of an inverted head and shoulders pattern.

Video of money making chart patterns.

Video on the rounding top chart formation.

Video on day trading and chart patterns.

Short video on how to read stock charts.

Gap Definition

A gap is a break in price with no overlap. Gaps are common in the morning as there is a flood of orders as a result of new releases and earnings reports. Gaps get filled roughly 75% of the time.

Flag Chart Formation Definition

A flag chart formation occurs after a security experiences an impulsive up or down move. After such a strong run-up, the security will take a "breather" before continuing in the direction of the primary trend.

Fan Principle Definition

The fan principle is based on the use of multiple trend lines to judge a major reversal in the market. The fan principle on first glance looks very busy on the chart, but it can provide some clarity to otherwise choppy patterns. The fan pattern or principle gets its name because it resembles a "fan".

Double Top Definition

Double Top is a chart pattern with two swing highs very close in price. This pattern can be seen in all time-frames.

Double Bottom Definition

A double bottom is a chart pattern with two bottoms very close in price. This pattern can be seen in all time-frames. There are a few requirements to classify a chart pattern as a double bottom:

Pennant Chart Definition

A pennant chart formation occurs after a security experiences an impulsive up or down move. After such a strong run-up, the security will take a "breather" before continuing in the direction of the primary trend.

Descending Triangle Definition

A descending triangle is a bearish chart formation. They can take place in both bull and bear markets, but often times they are a continuation pattern of an existing downtrend.

Diamond Chart Pattern Definition

A diamond chart formation is a rare chart formation that looks similar to a head and shoulders pattern with a V-shaped neckline. Diamond chart reversals rarely happen at market bottoms, it most often occurs at major tops and with high-volume.

Cup and Handle Pattern

The cup and handle pattern is a bullish continuation formation. This pattern is one of the newer chart formations and can be easily spotted on a price chart. The formation was first popularized by William O'Neil in his 1988 book, How to Make Money in Stocks.

Bull Trap Definition

A bull trap occurs when longs take on a position when a stock is breaking out, only to have the stock reverse and shoot lower. This counter move produces a trap and often leads to sharp sell offs.