Saturday, May 31, 2014

ClassicCharting .TechnicalAnalysis ,Triangles ,Forex

Watch a video on the Flag Chart Pattern as well as the related Pennant Chart Pattern. The Flag pattern usually occurs after a significant up or down market move. After a strong move, prices usually need to rest. This resting period usually occurs in the shape of a rectangle, thus the word "flag". The Flag is considered a continuation pattern because after resting, prices will usually continue in the direction they did before.
The chart of eBay (EBAY) shows many Flag patterns:
flag continuation chart pattern

Flag Buy Signal

When price has moved higher and prices have consolidated, creating a channel of support and resistance, a buy signal is given when prices penetrate and close above the upward resistance line.

Flag Sell Signal

Assuming prices previously moved downward, then after a period of price consolidation, a sell signal is given when price penetrates and closes below the support line.

For a more detailed description of the triangle chart pattern in a video format, seeSymmetrical, Ascending, & Descending Triangle Chart Pattern Video. The Triangle is acontinuation pattern using the concepts of support and resistance and price breakouts.
The chart below of Amazon.com (AMZN) shows the Triangle continuation pattern:
triangle continuation pattern buy breakouts to upside, sell breakouts to downside

Generally, when prices make significant moves, they go through a period of resting. Usually with a Triangle pattern, the price consolidation period consists of higher lows and lower lows, forming the shape of a "triangle". When the resistance and support lines (see: Support & Resistance) begin converging, price will usually burst out of the consolidation area andresume trending in the direction that prices have been moving previously.

Triangle Breakout Buy Signal

The signal to buy is given when the resistance line is penetrated to the upside. The signal is generally stronger if prices have been in an uptrend prior to the upside breakout.

Triangle Breakout Sell Signal

A sell signal occurs when the support line is penetrated to the downside. Usually the sell signal is considered stronger if prices have been in a downtrend prior to the downside breakout.
Two other closely related variants of the Triangle pattern are the Ascending and Descending Triangle pattern; these two patterns are shown next.

Ascending & Descending Triangles

Two closely related variants of the Triangle pattern are the Ascending and Descending Triangle pattern; these two patterns are shown below in the chart of the 100 ounce Gold futures:
ascending and descending triangle breakout chart patterns

Ascending Triangle

An Ascending Triangle is viewed as being more bullish than the regular Triangle patterns. With an Ascending Triangle, higher lows are being made (bullish sign) and sometimes higher highs are being made (also a bullish sign).

Ascending Triangle Buy Signal

As with the regular Triangle formation, the Ascending Triangle gives a buy signal when the resistance line is penetrated to the upside. Also, the signal is generally stronger if prices have been in an uptrend prior to the Ascending Triangle and upside breakout.

Descending Triangle

The Descending Triangle is viewed as being more bearish than the regular Triangle patterns. When a Descending Triangle is formed, lower lows are being made (bearish sign) and quite often, lower highs are being made (generally seen as bearish).

Descending Triangle Sell Signal

With the Descending Triangle formation, a sell signal occurs when the support line is penetrated to the downside. Traders usually view the sell signal as being stronger if prices have been in a confirmed downtrend prior to the Descending Triangle formation and downside breakout.













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