HomebeginnerTop 10 reversal chart pattern in profitable trading.
Top 10 reversal chart pattern in profitable trading.
August 4, 2022
Top 10 reversal chart pattern in profitable trading.
Today we are going to discuss about top 10 reversal chart pattern. In the previous syllabus of technical analysis, we have learned all the candlestick patterns topics in detail. In this and next few articles we will learn about chart pattern step by step. This information will help you a lot in trading. You can earn good profit from this. There are three types of chart patterns in this. First of all, today we will learn about reversal chart pattern. It has second continuation chart pattern and third neutral chart pattern.
All I am going to tell you is that you should make notes of this. In this article today I am going to give information in such a simple way. You will understand this information as soon as possible. You will understand this but while trading in live market. People who have experience, as well as people who know about this will find it easy to know. But people who are new, it will be a bit difficult to understand this market.
identify reversal chart pattern.
In this, the whole game is about practice. The more you practice, the more you will know and the more you will profit. As we saw the candlestick pattern in three parts earlier, similarly we are going to learn about the chart pattern in three parts. Candlestick patterns are made in single, double, triple first. But it is easy to understand. Chart pattern is a bit complicated to understand. Many of our candlestick patterns, resistance, support, up and down trends in the market are form in this. So it is important to understand it properly and study it daily.
We are going to learn reversal in this. What is Reversal? In this, when the market is in an up trend and due to the chart pattern, it reverses and goes into a down trend. Or if the market is in a down trend and the chart pattern reversal and goes into an up trend, these patterns are called reversal chart pattern.
Once you identify this chart pattern, you can earn money from the market. Another thing you should know about this is that when a chart pattern breaks a market it can be a fack. This can cause your loss. Let us know about this after the three parts of the chart pattern. MACD, RSI and Volume three indicators have to be used while looking at the chart pattern. After using this indicator you get confirmation about the trend in the live market and you can book profit. We are going to know about indicators in detail in the next few articles.
Movement identification in the previous market is very important while doing reversal chart pattern identification. It has to be recognized whether the movement of the market is in a down trend or an up trend. A chart pattern can be identified by the shape in which it is moving in support and resistance. Expert people immediately identify the chart pattern in the market while trading. Due to this, they get good profit from the market by studying a little technical analysis. There are different types of chart patterns. Through these types traders can know the future changes of the market. Its first foundation is to identify chart patterns in the market.
How do you study chart patterns?
Chart pattern study should be done keeping in mind other things in technical analysis. In live market you have to work daily, this will give you good study about chart pattern. In this one should know different candlestick. From which we know which chart pattern is going to be formed next. Along with this, the price action and trend of the market should be studied. Due to this, if we see a chart pattern in the market, we can predict the direction in which the market will turn. While doing market study, the chart pattern breaks the support or resistance. At that time, one should focus on whether a candlestick pattern is found above that level.
After the candlestick pattern is followed by the chart pattern above the volume of buyers and sellers, the next action can be predicted in the market. While studying the chart pattern, it is necessary to trade in the market yourself. First time doing paper trading daily. After taking a trade on paper, it should be estimated whether it goes to loss or comes to profit. This increases your experience in the field of trading and allows you to learn new strategies in chart patterns.
Types of reversal chart pattern.
In the Reversal chart pattern, we are going to take a look at the trend reversal in all live markets. Also how these chart patterns are formed. If we see a chart pattern in the market, we will also know in which time the market will reverse. At the same time, we will know when to take position in the market and when to set stop loss, target.
1) Double Top Chart Pattern.
In the double top chart pattern, the price goes up first, that is, it is an uptrend. Knowing in an up trend, a high is formed in the market. This is the maximum level of the high market price. When the price reached this point, it found a resistance. Resistance, support, trend are the first things we mentioned in the previous article. Anyway below I give link to it.
Price takes opposite direction at the place of resistance. For the first time, buyers are buying shares, when the stock market goes into an up trend and sellers are sitting at the place of resistance. Seller sells shares here and the price falls below the resistance and the market reverses and goes into a down trend.
When the price of the market is in a down trend, it needs support at a certain distance and goes back to the price up trend. And after reaching the price resistance for the second time, the price will be opposed again and it will go into a down trend. In this you can see that the price met the resistance twice. It is called a double top when the market reverses twice.
On the second top, the market reverses and goes into a down trend. At that time, the support market went down for the first time. The market goes down by breaking the support. At that time, stop loss should be applied to the high of the candle support break.
Then when the price comes down, the market reverses and goes close to the support line to retest. After this the market goes back from support to down trend. If the market falls in this, it can fall by 3-4% or it can fall by 10%. In this, we have to set a target below the gap as much as there is a gap between resistance and support.
MACD, RSI indicators are necessary while entering the market. Also when the market support is breaking. At that time, it is necessary to check the volume of that candle. Also, the volume of the first top in this chart pattern should be more than the second top.
2) Double Bottom chart pattern.
The shape of double bottom chart pattern you will see as w. In this pattern, the first down trend continues. In this, when the market is in a down trend, it reverses back to certain support. The trend of the market changes and it goes into an up trend.
When the market is in an up trend, the volume of sellers in the market increases at certain places. So the market starts falling from there. After this, the market reaches below the support line. Sometimes the market breaks the support line and falls down, at that time the market can find another support below and the market can reverse from there and go back into an up trend.
This line of market resistance in up trend can be break at this time and go up. At this time in the market, the G line breaks the resistance of the market. Put a stop loss on its low and there is a possibility that the price will go up and come back down.
Market comes back down for testing and comes around support. The market reverses and goes into an up trend. At that time position should be created in the market. But while taking an entry in the market, one should take precautions through some technical analysis whether the market price is going to go up.
3) Triple Top chart pattern.
Triple top reversal chart pattern is form from double top pattern. When M shape is form in double top. At that time, the market started to go into a down trend at point 4. In the triple top pattern, the market moves back up from the support of point 4.
Support is form at the top when the market goes into an up trend. The price of the market can come around this support and reverse. After this market reverses, the market breaks support for the third time in the triple top.
When market breaks support, stop loss should be apply to the high of his candlestick. When the market is falling, it is likely to go back up to retest. Take the low of the candlestick when breaking the entry support in the market. The difference between target support and resistance should be apply in the market.
You may be wondering, on what time frame should you recognize a chart pattern? If you are scalping in this, identify the pattern with candle time of 1-3-5 minutes. If you are doing intraday, you can decide from 5-10-15 minute candle and if you are doing swing trading, you can identify it from the candle pattern above 15 minutes.
4) Triple bottom chart pattern.
In triple bottom reversal chart pattern you will see double bottom chart pattern again till 4 number point. From this point price resistance reverses without breaking. After reversal, the price goes into a down trend. After going back to the support, the price is likely to reverse from there.
When the market price reverses and goes into an up trend, it breaks the resistance and goes up. When the price is going up, stop loss should be place at the low of the candle that occurs at the resistance. To retest the price in the market, it can be revers by going to a certain place. It may come close to the price support and reverse in an up trend.
At times, the market may break above the price support for the first time. At this time, if there is another green candle after the first candle above the support in the market, its high should be enter in the market. There is a point difference between support and resistance. The target of the market should be set above point.
5) Head and Shoulders chart pattern.
Head and shoulders revers chart pattern is the first time the price of the market is in an up trend. After a certain point, the price goes to the place of resistance and falls down. While this price is coming down, when it reaches the support level, it reverses from there and goes into an up trend. This up trend increases by breaking the first resistance and then after a few points the resistance opposes the trend. From there, the second resistance reverses in the market down trend.
Market continues in a down trend, at that time it bounces back when it comes close to the support line. Market bounces and its trend changes again. After this, the rising market gets close to the first resistance, its trend changes back and the market reverses and goes into a down trend. At this time, when the market starts down, the support level breaks and goes down.
After the market breaks the support level and goes down, it goes into an up trend to retest. There is a possibility that the market will go down after going to the place of support in an up trend. At this time, stope loss should be apply to the high of the break candle for support and after that, when the red candle appears again, the market should be enter. In this chart pattern point 1 and 2 are shoulders and point 3 is in head size.
6) Reverse Head and Shoulders chart pattern.
In this revers chart pattern you will see head and shoulder pattern in reverse shape. In this the first market falls. At that time, the market needs support first. At this point the market reverses and its trend changes. The price of the market goes back up, when the market goes up, it goes to the resistance and reverses. In this, the market falls back down, after which the price reaches the second support. At the second support, the price reverses and goes up.
When the market goes into an up trend, it reverses from resistance and converts into a down trend. After converting into a down trend, the market trend changes from the first support. The market goes back to the up trend, after going into the up trend, the support level is break and the market goes up.
After the market goes above the support, it is likely to come back down to retest. At the time when the support candle was break, its high would be enter in the market and a stop loss would be apply to the low. In this pattern, there are two points between the first resistance and support and the second point between resistance and support.
After the market goes above the support, it is likely to come back down to retest. At the time when the support candle was break, its high would be enter in the market and a stop loss would be apply to the low. In this pattern, the pointe between the first resistance and support and the pointe between the second resistance and support meet the two targets below.
7) Rising Wedge chart pattern.
In rising wedge pattern, market price is slowly moving into triangle. In this you know that after breaking the market trend line there can be a revers to test from there. Otherwise the market goes up or down as it is. In this pattern, Byers gradually weakens. Seller becomes strong.
In a pattern, the price moves up and down between support and resistance. In this, it breaks the price support and falls down, at that time the market is see to be bearish. When the market breaks the support, put a stop loss on the high of that candle and take an entry on its low.
After the market goes above the support, it is likely to come back down to retest. At the time when the support candle was break, its high would be enter in the market and a stop loss would be apply to the low. In this pattern, the pointe between the first resistance and support and the pointe between the second resistance and support meet the two target below.
8) falling Wedge.
In a falling wedge, the market starts in a down trend for the first time. The direction of the market moves up and down between resistance and support. The market goes into a down trend and it continues in the shape of a wedge. In this pattern, sellers are becoming weak and buyers are becoming strong.
After breaking the price resistance and going up, the price is likely to come back down to retest. When the price goes down, it bounces and increases. At this time, a candle should be place above the break of the resistance and a stop loss should be apply to its low. Entry in the market should be take at the high of that candle.
9) Bearish Expending Triangle.
In bearish expanding triangle revers chart pattern, market price starts in up trend for the first time. In this pattern, as the price increases, its candle gradually increases. That is, once a triangle is form, it gradually expands further. In this, both the low and high of the candlestick increases.
In the pattern, the market moves between the resistance line and the support line. While the triangle is expanding in the market up trend. If the market breaks the support, it is likely to turn bearish. When the market is bearish, it can come back to the support place to retest. May fall back from market support.
Breaking market support and becoming bearish. Apply a stop loss to the high of the candle that breaks the support. Entry should be take in the market at the low of the candle. Here the stope loss should be set down at pointe between support and resistance of the last candles in the triangle.
10) Bullish Expanding Triangle.
In this revers chart pattern, the price continues in a down trend. First the price increases gradually. A tringle is form in a bullish expanding pattern. This tringle goes up and continues in market down like candles. With it the tringle expands further. Candle’s low and high are increasing.
At the end of the pattern the candle breaks the resistance level and goes up. there is a possibility that the market will go into an up trend. stop loss should be apply to the low of the candle which breaks the resistance and the high should be enter in the market. the market may come back down to retest and come back up near the resistance.
In this article we have seen Top 10 reversal charts pattern. You need to go and get this chart pattern. On this chart pattern you will understand the information of chart patterns in the next part. Also this chart pattern and candlestick pattern which we have seen before. You can book a good profit daily from trading through them. These are strategy between technical analysis and trading. Every trader has a different strategy. By applying this strategy in the market, traders can book good profit from the market.