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How to Recognize the Trend?
14 November 17:39
Q: After we studied a lot of candlesticks, we need to know how to recognize trends. Normally the trend consists of coninous candlesticks with certain trend swing.
A: You are right. We call it Chart Pattern. Let's get to some details.
1.It shows the direction after the Chart Pattern, Bullish or Bearish.
2.It shows the different charts that consist of swings created by continuous candlesticks.
Reversal pattern
Continuation pattern
Neutral pattern
Q: Let's see how to identify the direction.
A:
Reversal pattern
Head & Shoulders
1.It is Bearish Reversal Pattern
2.Head point is 3.
3.Shoulder points are 1 and 5.
4.Neckline points are 2 and 4
5.It shows the reversal signals, as the price keeps going down and even lower than neckline.
6.Neckline is also the support line, the entry point to do Short trading, also the resistance line for the price to bounce back.
Reverse Head & Shoulders
1.It is Bullish Reversal Pattern
2.Head point is 3.
3.Shoulder points are 1 and 5.
4.Neckline points are 2 and 4
5.It shows the reversal signals, as the price keeps going up and higher than neckline.
6.Neckline is also the support line, the entry point to do Long trading, also the resistance line for the price to retrace back.
Double Top
1.It is Bearish Reversal Pattern.
2.It is similar to Head & Shoulder, shows the downtrend.
Triple Top
1.It is similar to Double Top but one more top, it is a Bearish Reversal Pattern.
2.The same as Double Top, the neckline is the support also the resistance line.
Triple Bottom
1.It is Bullish Reversal Pattern, simlar to Double Top but reversed.
2.The logic behind it is there are three bottoms touched the support line but can't cover the buying power and the price still goes up.
3.The points of 2&4 are the neckline, it is the support also the resistance line.
Continuation pattern
Bullish Rectangle
1.It looks similar as Double Top, but there's one more swing.
2.It created a rectangle and shows the support&resistance line and the pattern is still pointing to Bullish direction.
Bearish Rectangle
1.It is the mirror of Bullish Rectangle.
2.It created a rectangle and shows the support&resistance line and the pattern is still pointing to Bearish direction.
The similar shapes of the trends also have the following that belong to Continuation pattern.
Bullish Flag
Bearish Flag
Another two are typical.
Cup&Handle
It is the continuation pattern that directing the continuous Bullish trend.
Reversed Cup&Handle
It is the continuation pattern that directing the continuous Bearish trend.
Neutral pattern
1.The following 4 patterns have similar meanings.
2.The trend may happen on both sides.
3.Can't recognize the clear trend from current patterns.
Ascending Triangle
Descending Triangle
Symmetrical Contracting Triangle
Symmetrical Expanding Triangle
Conclusion:
1.All above patterns show the possibilities.
2.All above patterns consist of the candlesticks.
3.Don't only analyze according to the trend analysis, you have to combine other indicators as well.
Q: That's all for today.
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