Technical Analysis: Part 6 (Chart Pattern)

Pennants Pattern:

• Pennants is a continuation pattern which is formed when there is a large movement in stock price, followed by a consolidation period with converging trend lines. This pattern forms with lower highs & higher lows, over one to five weeks.

Flag Pattern:

• Flag pattern is short term continuation pattern that mark a small consolidation before the previous move resumes. This pattern is usually preceded by a sharp advance or decline with heavy volume, and mark a mid-point of the move. A flag pattern is formed when parallel lines is drawn through the peaks & the troughs in a correction (or a rally during a down-trend)

  
Cup & Handle Chart Pattern:

• The cup & handle chart pattern is a bullish continuation patterns that takes the form of a consolidation period followed by a break out to the upside.

Important Characteristics of Cup & Handle:

1. Trend: A cup & handle formation should be followed by an uptrend.
2.  Shape: The cup must always precede handle. The cub should form a rounded bowl  or U shape, must avoid V shape cup.
3. Depth: The cup should not too deep. The handle should form in the top half of the cup pattern & should not be too deep.
4. Volume:  Volume should be low at the bottom of the cup & should rise when the stock moves up & test the old high.