2 Chart Patterns PDF
2 Chart Patterns PDF
2 Chart Patterns PDF
in
Chart Patterns
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Trading Ideas/Methods
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Chart patterns: Flags, Pennants, Wedges, Triangles
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Most difficult for scalp traders to follow, since it requires buying aggressive at a new high
price and (potentially) taking profits at a higher price, or selling at a low price and (potentially)
taking profits at a lower price.
Scalp trading methods that use breakouts above resistance as buy signals and breakouts
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below support as sell signals appear to be the most recognizable for the average trader
Additional variations of breakout methods focus on buying or selling only based on price
action breakout above or below the previous pivots areas (swing pivots or floor pivots)
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Up Trend
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tips...!
Down Trend
Day Trading
Gapping
Up/Down
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Consolidation
Or
Range-Bound
Sideways Price Action
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Bearish Piercing
Bullish Piercing
UPTREND/BREAKOUT
PHASE II
Consider ½ X
position size
Consider 1 ½
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DOWN TREND//SELLOFF
LOWER HIGHS/LOWER LOWS
X position size
BEARS IN CONTROL
SELLERS
VOLUME UP = BEARISH
VOLUME DOWN = BULLISH
FEAR SUPPORT
BUYING POWER
ACCUMULATION
PHASE IV SIDEWAYS PRICE PATTERN
VOLUME CONSOLIDATION
OVERSOLD
PHASE I
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Transition Among
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only sure shot Phases
tips...!
T2-3 T3-4
Transition from Transition from
Phase 2 to 3 Phase 3 to 4
Down Trend
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Consider 1 ½ X Position
Breakout Size
T1-2 T4-1
Transition from
Phase 4 to 1
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Trading with the trending price action.
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2 3
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1
4 www.intradaymoney.in
Price
4 Action
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4
Ideal trading 4
situation
4 Natural pullbacks
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4 in price action
ENTRY
Up Trend
B
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only sure shotAdd
tips...! Parallel
2
1
C
A Flags
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J
Add K
2
1
Parallel
3
Down Trend L
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Initial Stop
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A
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C Risk
Parallel 2
1
Basic break
down entry
3 signal
B
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Flags Preliminary
target
RESISTANCE
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SELL POWER
DISTRIBUTION
SIDEWAYS PRICE PATTERN
VOLUME CONSOLIDATION
OVERBOUGHT
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UPTREND/BREAKOUT
PROFIT TAKING
PHASE II
20 MA
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Consider ½ X
position size DOWN TREND//SELLOFF
LOWER HIGHS/LOWER LOWS
BEARS IN CONTROL
SELLERS
VOLUME UP = BEARISH
VOLUME DOWN = BULLISH
FEAR
PHASE IV Consider 1 ½
200 MA X position size
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(1R)
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Initial Signal & Setup
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size
Intraday
T1-2 T4-1
Transition from Transition from
Phase 1 to 2 Phase 4 to 1
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Trading with the trending price action.
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1
2 3
M Patterns
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Prices trend upward (short term) and usually don’t rise above the first high
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Evaluate the decline between the two price action lows
Define the confirmation point as the lowest low between the two price action highs
After the second high in price action, look for price action to decline below the confirmation
point without retracing above the highs
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Look for volume to be higher on the first high typically compared to the more recent high
Look for volume to increase substantially for the breakdown of the M pattern
Can consider a measurement rule of the height of the price action from the low to the
confirmation point and extrapolate as a potential target area
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W Patterns
Prices trend downward (short term) and usually don’t decline below the first low
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only sure shot
Evaluate thetips...!
rise between the two price action lows
Define the confirmation point as the highest high between the two price action lows
After the second low in price action, look for price action to rise above the confirmation point
without retracing below the bottoms
Look for volume to be higher on the first low typically compared to the more recent low
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Look for volume to increase substantially for the breakout of the W pattern
High failure rate such that price action does not break above the confirmation point and
hence continues trending lower
Can consider a measurement rule of the height of the price action from the low to the
confirmation point and extrapolate as a potential target area
4 www.intradaymoney.in
Price
4 Action
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4
Ideal trading 4
situation
4 Natural pullbacks
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4 in price action
ENTRY
LONG Entry
•Up trend
•Higher Highs & Higher Lows
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Price
Action
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Ideal trading
situation
Higher
ENTRY
LONG Entry
•Up trend
•Higher Highs & Higher Lows
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Stops
M-Pattern Initial Stop
Fibonacci
Retracements (1R)
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A
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C
2
1
Gap
3
B
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Flags Preliminary
target
Unless there is adequate reward remaining in the trade with the gap
– skip the trade
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2 3
B A
3 Parallel 2
C
Flags
Flags 2
1
1
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C 3
B
A
2 3
1
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OR = Opening Range
Previous Today
Day
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High
OR High
Candlestick
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Reversal
Pre-Market
Gap
Gap
Downtrend
Fill
OR Low
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Price
Action
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Ideal trading
situation
OR High
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ENTRY
OR Low
LONG Entry
•Up trend
•Higher Highs & Higher Lows
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2B/3B
Reversal
2B/3B
Reversal
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Price
Action
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Ideal trading
situation
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ENTRY
2B/3B Reversal
LONG Entry
•Up trend
•Higher Highs & Higher Lows
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OR = Opening Range
Previous Today
Day
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High
Candlestick
Reversal
Gap
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Pre-Market
OR Low
Gap
Fill
Uptrend