|Chart Analysis and Chart Pattern Recognition – Bear Flag, Bull Flag, Bearish Pennant and Bullish Pennant.
Bear flag, bull flag, bearish pennant and bullish pennant chart patterns represent brief pauses after sharp moves in a dynamic
market. They are considered as most reliable continuation patterns. Flags are
characterized as short-term channels slanting against the main trend. Pennants
represent short-term triangle formations. Volume is heavy during the sharp move
preceding the formation.
# 1 Flags and pennants present an additional opportunity to enter the
# 1 Usually flags and pennants represent short-term pauses technically
required to reset overbought/oversold technical indicators and allow
further movement. They likely to appear at earlier stages of the larger patterns,
when short-term technical indicators are grossly overbought/oversold, but
long-term indicators are in the middle range. In a situation when both long and
short-term indicators are overbought (oversold), flags and pennants have more
chances to become the beginning of a larger formation. Flags and pennants are
considered invalid as soon as they break the parent's formation trend line.
# 2 As a continuation pattern, rectangle usually appears within a young
trend characterized by neutral long-term indicators and overbought/oversold
short-term indicators. Rectangle resets daily CTI to neutral and then continues the
movement in parent's direction.
# 3 For the best results, chart patterns should be considered together with other technical analysis signals and technical trading techniques.
Estimated Target: projected support/resistance level of larger trend.
|Stock Chart Patterns.
Price chart is the result of activity of all market
participants. It reflects periods of high expectations,
greed and fear. As most emotional human activities, it
presents different patterns. Chart analysis and pattern recognition provide
useful information for technical analysis, trend analysis and market
timing signals for technical trading.
Trendlines and chart patterns can be analyzed in different time
frames: from intraday, daily and weekly frames, up to
multi-year patterns. It is the best practice to
analyze patterns in conjunction with other technical
Each price pattern is formed by several smaller sub
waves. At least 3 – 4 sub waves are required to perform
a reliable pattern screening. We use minimal required number of sub
waves for an earlier pattern recognition screener. On the other
hand, pattern formed with more sub waves is more
Pattern screener - chart analysis and stock chart pattern recognition with chart patterns screening.
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