Chart Patterns

What is an Ascending Top

This video reviews this day traders favorite charting pattern, the inverted head and shoulders which resembles a W bottom.  He reviews a few examples of trades that he placed and mentions that it is very important to see volume on the break through the neckline of the inverted head and shoulders.

The speaker whiteboards two very reliable chart patterns which are two of his favorites.  The double top and double bottom repeat themselves due to human emotion.  Traders need to see how the market reacts at the pivot point which represents the pivot

The video covers a technical chart formation known as the rounding top.  The rounding top occurs after a strong up move and signals that the momentum has slowed down and that the stock is vulnerable to a breakdown.  Many times, the head & shoulders top

The speaker covers some profitable chart patterns.  He first talks about the reliability of symmetrical triangles and how one can make profits on an upward or downward breakout.  Volume should be monitored closely and it should pick up when t

What are Kagi Charts?

Kagi charts display the price action for a security.  This method was developed by the Japanese in the late 1800s.  Kagi charts are similar to point and figure charts in that it is not time based, but is dependent upon the price movement of the security to print a new line on the chart.
 

How to Construct a Kagi Chart

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. New traders should go in the direction of the gap, as you can get caught in a trap going counter to the primary trend.

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.

Equivolume Charts Definition

Equivolume charts display the relationship between price and volume in a bar. The top of the bar is the high of the session and the bottom of the bar is the low of the session. Equivolume charts differ from other price bars in that the width of the bar is determined by the volume on the session.

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.

Renko Charts Definition

Renko charts can trace their origins to Japan and were first introduced to the West by Steve Nison in his book "Beyond Candlesticks". The actual word renko is derived from the Japanese word renga, which means bricks.

Descending Triangle Definition

A descending triangle is a bearish chart pattern. 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 pattern 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.