Embed Size (px)
Citation preview
Arab Academy for Arab Academy for Science and Science and
Technology & Technology & Maritime TransportMaritime Transport
Investment and finance Investment and finance InstituteInstitute
Technical Analysis
Lecturer: Mr. - Ahmed el oteify
Reversal and Continuation
PatternsAhmed Oteify
Reversal Patterns
A reversal pattern reverses the trend direction from anuptrend to a downtrend and vice versa
When an uptrend reverses to a downtrend, buyers aregetting weaker, and sellers are getting stronger
When an downtrend reverses to an uptrend, sellers aregetting weaker, and buyers are getting stronger
During a reversal formation, there is a shift in the power between buyers and sellers (demand and supply). This shift in strength is the reason for the trend reversal
Reversal Patterns
*Head and Shoulders
Reverses the trend from the upside to the downside
*Inverted Head and Shoulders
Reverses the trend from the downside to the upside
*Double Tops and Triple Tops
Reverses the trend from the upside to the downside
*Double and Triple Bottoms
Reverses the trend from the downside to the upside
Wedges
Head-and-ShouldersHead-and-Shoulders
The Head-and-Shoulders price pattern is the most reliable The Head-and-Shoulders price pattern is the most reliable and well-known chart pattern. It gets its name from the and well-known chart pattern. It gets its name from the
resemblance of a head with two shoulders on either side. The resemblance of a head with two shoulders on either side. The reason this reversal pattern is so common is due to the reason this reversal pattern is so common is due to the
manner in which trends typically reversemanner in which trends typically reverse..
A up-trend is formed as prices make higher-highs and higherA up-trend is formed as prices make higher-highs and higher lows in a stair-step fashion. The trend is broken when this lows in a stair-step fashion. The trend is broken when this
upward climb ends. As you can see in the following upward climb ends. As you can see in the following illustration, the "left shoulder" and the "head" are the last illustration, the "left shoulder" and the "head" are the last
two higher-highstwo higher-highs
The right shoulder is created as the bulls try to push prices higher, but are The right shoulder is created as the bulls try to push prices higher, but are unable to do so. This signifies the end of the up-trend. Confirmation of a unable to do so. This signifies the end of the up-trend. Confirmation of a
new down-trend occurs when the "neckline" is penetratednew down-trend occurs when the "neckline" is penetrated During a healthy up-trend, volume should increase during each rally. A sign During a healthy up-trend, volume should increase during each rally. A sign
that the trend is weakening occurs when the volume accompanying rallies that the trend is weakening occurs when the volume accompanying rallies is less than the volume accompanying the preceding rally. In a typical is less than the volume accompanying the preceding rally. In a typical
Head-and-Shoulders pattern, volume decreases on the head and is Head-and-Shoulders pattern, volume decreases on the head and is especially light on the right shoulderespecially light on the right shoulder
Following the penetration of the neckline, it is very common for Following the penetration of the neckline, it is very common for prices to return to the neckline in a last effort to continue the up-prices to return to the neckline in a last effort to continue the up-trend (as shown in the preceding chart). If prices are then unable trend (as shown in the preceding chart). If prices are then unable
to rise above the neckline, they usually decline rapidly on to rise above the neckline, they usually decline rapidly on increased volumeincreased volume..
An inverse (or upside-down) Head-and-Shoulders pattern often An inverse (or upside-down) Head-and-Shoulders pattern often coincides with market bottoms. As with a normal Head-and-coincides with market bottoms. As with a normal Head-and-
Shoulders pattern, volume usually decreases as the pattern is Shoulders pattern, volume usually decreases as the pattern is formed and then increases as prices rise above the necklineformed and then increases as prices rise above the neckline..
Price Target after the break of the neckline
Target
Head & Shoulders
Selling after confirmation
Selling before confirmation
Inverse Head & Shoulders
Target
Double Top
Double Bottom
Target
WedgesWedges
Falling WedgeFalling Wedge
Rising WedgeRising Wedge
Continuation Patterns
A continuation pattern appears during the trend and it acts as a continuation.
A continuation pattern shows balance between buyers and sellers. It is a sideways movement that shows that buyers and sellers are having the same strength
When continuation pattern appears after an uptrend, the trend is expected to continue to the upside, and vice versa.
Continuation patterns can act as reversal sometimes.
AHMED EL OEIFYAHMED EL OEIFY
Continuation Patterns
*Triangles
Symmetrical ------ BalanceAscending ------- BullishDescending ------ Bearish
*Rectangles
Balance between buyers and sellers
*Flags and Pennants
Continuation formations, can be bullishor bearish
Cub & Handle
Bullish
Symmetrical Triangle
Ascending Triangle
Descending Triangle
Flags and Pennants
Cub & HandleCub & Handle ContinuationContinuation
referencesreferences
technical analysis the complete technical analysis the complete resource for financial marketresource for financial market
((KirkpatrickKirkpatrick )) technical analysis explainedtechnical analysis explained
((martin g pringmartin g pring ))Technical analysis of the financial Technical analysis of the financial
marketsmarketsJohn MurphyJohn Murphy(())
