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Hello Folks!
Welcome to our
Technical Analysis Education section! Here, you will find information about the
most popular trading formations/patterns and practical tests. Technical Analysis enables
you to analyze the price of a stock, and to have more reliable forecast of the stock
trend.
The following describes patterns/formations, called reversal formations. Reversal
Formations occur when there is a sudden change in the trend, for example, from a
downtrend to an uptrend. I will explain in detail: Investors have been selling/selling
short a stock because they anticipated unfavorable news or rumors about the company's
prospect. The stock is in downtrend. At the bottom (this happens without alert), some
great news about the company's earnings is published or rumored. Thus, the situation is
reversed as the short sellers of the stock become very anxious to close their existing
short positions and start buying shares. With the demand for the stock for purchase
suddenly outweighing the supply, the stock price begins to rise, i.e. the downtrend is
converted directly into an uptrend. Several types of reversal formations will be
descibed below.
1. Head and Shoulders
technical formation.
2. Double-Top and Triple-Top technical formations.
3. Rounding-Top and Rounding-Bottom technical formations.
4. Descending-Triangle
technical formation.
5. Symmetrical-Triangle
technical formation.
6. Ascending-Triangle technical formation.
7. Double-Bottom and
Triple-Bottom technical formations.
8. Rectangles/Trading Ranges
technical formations.
9. Cup-with-Handle technical
formations.
10. Flags and Pennants technical formations.
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