A chart pattern or price pattern is a
pattern
A pattern is a regularity in the world, in human-made design, or in abstract ideas. As such, the elements of a pattern repeat in a predictable manner. A geometric pattern is a kind of pattern formed of geometric shapes and typically repeated l ...
within a
chart
A chart (sometimes known as a graph) is a graphics, graphical representation for data visualization, in which "the data is represented by symbols, such as bars in a bar chart, lines in a line chart, or slices in a pie chart". A chart can repres ...
when prices are graphed. In stock and
commodity market
A commodity market is a market that trades in the primary economic sector rather than manufactured products. The primary sector includes agricultural products, energy products, and metals. Soft commodities may be perishable and harvested, w ...
s trading, chart pattern studies play a large role during
technical analysis
In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. As a type of active management, it stands in contradiction to ...
. When
data
Data ( , ) are a collection of discrete or continuous values that convey information, describing the quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpreted for ...
is plotted there is usually a pattern which naturally occurs and repeats over a period. Chart patterns are used as either reversal or continuation signals.
Traditional chart pattern
Included in this type are the most common patterns which have been introduced to chartists for more than a hundred years. Below is a list of the most commonly used traditional chart patterns:
Reversal Patterns:
# Double Top Reversal
# Double Bottom Reversal
# Triple Top Reversal
# Triple Bottom Reversal
# Head and Shoulders
# Key Reversal Bar
Continuation patterns:
# Triangle
# Flag and Pennant
# Channel
# Cup with Handle
Harmonic pattern
Harmonic Pattern utilizes the recognition of specific structures that possess distinct and consecutive Fibonacci ratio alignments that quantify and validate harmonic patterns. These patterns calculate the Fibonacci aspects of these price structures to identify highly probable reversal points in the financial markets. This methodology assumes that harmonic patterns or cycles, like many patterns and cycles in life, continually repeat. The key is to identify these patterns and to enter or to exit a position based upon a high degree of probability that the same historic price action will occur.
Below is a list of commonly used harmonic patterns:
# Bat
# Butterfly
# Gartley
# Crab
# Deep Crab
# Shark
# 3 Drives
# AB=CD
# 5-0
Traders use the Potential Reversal Zone (PRZ) as an important level of support/resistance in their trading and price action strategy.
Candlestick pattern
In
technical analysis
In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. As a type of active management, it stands in contradiction to ...
, a
candlestick pattern
In finance, financial technical analysis, a candlestick pattern is a movement in prices shown graphically on a candlestick chart that some believe can help to identify repeating patterns of a particular market movement. The recognition of the patte ...
is a movement in prices shown graphically on a
candlestick chart
A candlestick chart (also called Japanese candlestick chart or K-line) is a style of financial chart used to describe price movements of a security, derivative, or currency.
While similar in appearance to a bar chart, each candlestick represent ...
that some believe can predict a particular market movement. The recognition of the pattern is subjective and programs that are used for charting have to rely on predefined rules to match the pattern. There are 42 recognized patterns that can be split into simple and complex patterns.
Steve Nison is the person who introduced candlesticks to the West.
Below is a list of commonly used candlestick patterns:
# Engulfing
# Inside bar
# Doji
# Pin bar
# Morning doji star
# Evening doji star
# Tweezer top
# Tweezer bottom
See also
*
Elliot wave
The Elliott wave principle, or Elliott wave theory, is a form of technical analysis that helps financial traders analyze market cycles and forecast market trends by identifying extremes in investor psychology and price levels, such as highs and ...
*
List of information graphics software
This is a list of software to create any kind of information graphics:
* either includes the ability to create one or more infographics from a provided data set
* either it is provided specifically for information visualization
Vector graphics
...
*
Market trends
A market trend is a perceived tendency of the financial markets to move in a particular direction over time. Analysts classify these trends as ''secular'' for long time-frames, ''primary'' for medium time-frames, and ''secondary'' for short time- ...
*
Price action trading
Price action trading is about reading what the market is doing, so you can deploy the right trading strategy to reap the maximum benefits. In simple words, price action is a trading technique in which a trader reads the market and makes subjective ...
*
Trend following
Trend following or trend trading is a trading strategy according to which one should buy an asset when its price trend goes up, and sell when its trend goes down, expecting price movements to continue.
There are a number of different techniques, ...
References
{{DEFAULTSORT:Chart Pattern
Technical analysis
Chart patterns