7 Chart Patterns That Consistently Make Money Pdf
If you're looking to make money in the stock market, one of the most important things you need to do is learn how to analyze charts. Chart patterns are one of the most effective ways to do this, as they can give you insight into how a stock is likely to behave in the future. In this article, we'll take a look at seven chart patterns that consistently make money.
1. The Cup and Handle Pattern
The cup and handle pattern is a bullish continuation pattern that occurs when a stock forms a "U" shape followed by a slight dip, then a small consolidation pattern. This pattern is a sign that the stock is likely to continue its upward trend after a brief consolidation period.
2. The Double Bottom Pattern
The double bottom pattern is a bullish reversal pattern that occurs when a stock forms two consecutive lows at approximately the same price level. This pattern is a sign that the stock has reached a support level and is likely to reverse its downward trend.
3. The Head and Shoulders Pattern
The head and shoulders pattern is a bearish reversal pattern that occurs when a stock forms three peaks, with the middle peak being the highest. This pattern is a sign that the stock has reached a resistance level and is likely to reverse its upward trend.
4. The Bull Flag Pattern
The bull flag pattern is a bullish continuation pattern that occurs when a stock experiences a sharp upward movement followed by a slight consolidation pattern in the form of a downward-sloping channel. This pattern is a sign that the stock is likely to continue its upward trend after a brief consolidation period.
5. The Bear Flag Pattern
The bear flag pattern is a bearish continuation pattern that occurs when a stock experiences a sharp downward movement followed by a slight consolidation pattern in the form of an upward-sloping channel. This pattern is a sign that the stock is likely to continue its downward trend after a brief consolidation period.
6. The Falling Wedge Pattern
The falling wedge pattern is a bullish reversal pattern that occurs when a stock forms a wedge shape with the upper trendline sloping downward and the lower trendline sloping upward. This pattern is a sign that the stock is likely to reverse its downward trend and begin moving upward.
7. The Rising Wedge Pattern
The rising wedge pattern is a bearish reversal pattern that occurs when a stock forms a wedge shape with the upper trendline sloping upward and the lower trendline sloping downward. This pattern is a sign that the stock is likely to reverse its upward trend and begin moving downward.
By learning these seven chart patterns and how to read them, you'll be able to make more informed decisions when it comes to buying and selling stocks. Remember, though, that no chart pattern is foolproof, and it's always important to do your own research and analysis before making any investment decisions.