Candlesticks Chart Pattern For Trading

Previously, we have covered very basic course for understanding basic candlesticks and some very common pattern for making profits using candlesticks behavior. We have inform our readers earlier about that you cannot only predict the behavior of market just by the candlesticks as a lot of factors including candlestick chart pattern involves in it. In this blog, ABIDEA Team will cover trading chart patterns. Reading previous articles will give you insight about the prior knowledge required for this course.

Before starting keep in mind, you may got a lot of information, articles, videos, lectures, blogs for trading but the best practice is to try and test these yourself as at the end of the day you are responsible for your capital and as we say trading is not magic, its maths.

Candlesticks Chart Pattern

Chart pattern is a technical analysis, it provide indication of the future trend of shares. The most important key in these chart pattern are  Support & Resistance lines which is more of a physiological barrier and helps making a pattern. These pattern are recorded in the form of shapes in between the support and resistance lines. The most common and general types of pattern are as follow:

Before starting keep in mind, you may got a lot of information, articles, videos, lectures, blogs for trading but the best practice is to try and test these yourself as at the end of the day you are responsible for your capital and as we say trading is not magic, its maths.

Candlesticks Chart Pattern

Chart pattern is a technical analysis, it provide indication of the future trend of shares. The most important key in these chart pattern are  Support & Resistance lines which is more of a physiological barrier and helps making a pattern. These pattern are recorded in the form of shapes in between the support and resistance lines. The most common and general types of pattern are as follow:

  1. Triangle

  2. Channels and Rectangle

  3. Wedges

  4. Head and Shoulder

For now, we will cover Triangle pattern in detail click on the links for others, keep following.

Triangle Pattern

Triangle is formed in between support and resistance lines. We will explain each term further.
Triangle Pattern can be of three types.

  1. Symmetric Triangles
  2. Ascending Triangles
  3. Descending Triangles

Symmetric Triangle:

symmetric-triangle

 

A negative sloping resistance line at the top indicates a reducing level or profit taking while positive sloping support line is preventing further price decrease. If such a triangle is formed between a chart the both resistance and support squeezes lines into corner and make a lot of pressure.

Now when the trend breaks the price will move in the direction of breakout that simply means it can either go down breaking the support level or up breaking the resistance level.

Ascending Triangle

ascending-triangle

In ascending triangle trend the resistance will be in top and the support lines will be in bottom. Positive Support line is squeezing the candlesticks trend in the direction of resistance. This means that the bulls are entering into the market and the positive trend or price increase can be predicted once the trend breaks out. Remember, ascending triangle usually occurs because of bullish trend.

 

Descending Triangle

descending-triangle-abidea

In descending triangle the resistance line is at the bottom of trend that is preventing price to go further down while support line is at the top. It is inverse of ascending triangle as you can see in the above image that support line is squeezing the trend lines in the direction of resistance. This help is understanding that bears are gaining control of the market and when the trend line breaks the price will move down breaking resistance level.

Descending Triangle trend is due to large number of bear movement in the market.

Important to know while trading in Triangles

It is very important to know while trading in triangles that ascending triangle may also be found in descending trend. So resistance lines and resistance level should be test twice. Asset closing price should also be rising with the trend. In simple words candlesticks should be check that they are approaching same resistance line you have made and following the same resistance level.

Normally volume in the ascending trends contracts however we also have few number of cases in which the volume does not contracts. This is because the most of the investor do not know that where the trend is going so they take there capital out.

We have covered some very basic of triangle candlestick chart in detail. We will be covering more in the upcoming series. Give us your feedback and share if you want to hear more from us.

Trade Smartly!

Bears get Money, Bulls get Money and Pigs get Slaughtered.

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