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knowledge to the beginners.
Day 17: Basic Stock Market Concepts
Technical Analysis for Beginners:
1. What is a Double Top Pattern?
A double top pattern is an extremely bearish reversal pattern that typically occurs after an extended uptrend in price of a stock or an asset. It is a common chart pattern we observe in financial markets very often indicating potential reversal of an uptrend. It looks like the letter "M" when the pattern is formed. So we call this pattern as M pattern. It can happen in any time frame in 15 minutes, in hourly, in daily, in weekly or in fact, in monthly also.
The
pattern is confirmed when the price of a security falls below the support level
between the two identical highs formed earlier.
2. What is a Double Bottom
Pattern?
The double bottom is a bullish reversal chart pattern that typically occurs after the end of a downtrend. It is completely opposite of Double Top pattern. It looks like the letter "W" when the pattern is formed. So we call this pattern as W pattern. This pattern can happen in any time frame 15 minutes, 30 minutes, hourly, daily, weekly or in fact, in monthly also.
3. What is a Triple Top
Pattern?
The triple top pattern is a bearish reversal chart pattern that occurs after a long uptrend. It is the extended uptrend of the double top pattern. It consists of three consecutive peaks or tops formed approximately at the same levels with two minor pullbacks in between.
4. What is a Triple Bottom
Pattern?
A triple bottom chart pattern is a bullish reversal pattern indicating a shift of bearish market sentiment to bullish market sentiment. It means that that the price comes at a solid support level after a long down trend. It's like a extended double bottom pattern.
It forms with three
lows approximately at the same levels which is a strong support line. The
confirmation of the pattern cones when the price breaks out the resistance
level forms by consecutive highs between the lows.
5. What is an Ascending Triangle Pattern?
An ascending triangle pattern is a bullish chart pattern which forms making identical multiple highs at the same level and creating higher lows consecutively. The series of multiple resistances make a horizontal line and the consecutive higher lows form an ascending trending looking like a triangle when the two lines are connected at the end.
The pattern indicates a strong bullish sentiments among the
buyers. The buyers are buying the security inspite of touching the resistance
many times.
6. What is a Descending
Triangle Pattern?
A descending triangle pattern is a bearish reversal pattern indicating a downtrend in price. It is formed with making multiple lows at the same level and lower highs in a descending way. When two lines meet each other at the lowest point it looks like a triangle. The pattern indicates a strong bearish sentiments in the market and bears are controlling the market in selling side.
7. What is a Bullish Flag
Pattern?
Bullish Flag is a bullish continuation pattern that occurs during an uptrend. It consists of a sharp price rise (the flagpole), followed by a period of consolidation that forms a small rectangle (the flag). A breakout above the upper boundary of the flag signals the continuation of the uptrend.
This pattern indicates
that the buyers are in full control of the market and the sellers are unable to
push the price down, and so we get small candles in the pullback.
8. What is a Bearish Flag Pattern?
Bearish flag pattern
is a bearish chart pattern used in technical analysis indicating the
continuation of downtrend. This pattern reveals the sellers are jn full control
of the market and the buyers are unable to push the price higher. So, in the
pullback, we see small candles.
9. What is a Rising Wedge Pattern?
A Rising Wedge is a bearish reversal chart
pattern that forms when the price consolidates between upward-sloping support
and resistance lines. The range narrows as the lines converge, and a breakdown
below the support line signals a potential downward reversal. This pattern
generally indicates trend reversal or the continuation of the bearish
trend.
10. What is a Falling Wedge Pattern?
A
Falling Wedge is a bullish reversal pattern that forms when the price
consolidates between downward-sloping support and resistance lines. As the
lines converge, the range narrows. A breakout above the resistance line signals
a potential upward reversal. This pattern indicates trend reversal or continuation
of the bullish trend.
If you have any other questions in your mind relating to stock market basics or need any clarification, please put your query into the comment box, We will try our best to clarify the same
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
