DOCSLIB.ORG

Classic Chart Patterns Chart Pattern Recognition a Quick Reference Guide for Traders Tools Provided by Recognia

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Classic Chart Patterns Chart Pattern Recognition a Quick Reference Guide for Traders Tools Provided by Recognia StreetSmart Edge features Classic Chart Patterns Chart Pattern Recognition A quick reference guide for traders tools provided by Recognia. www.schwab.com/ssedge Triple Bottoms Double Bottoms Triangles Diamonds Megaphones Bullish: The Triple Bottom starts with prices Bullish: This pattern marks the reversal of a Bullish: Two converging trendlines as prices Bullish or Bearish: These patterns usually Bullish: The rare Megaphone Bottom—a.k.a. moving downward, followed by three sharp prior downtrend. The price forms two distinct reach lower/stable highs and higher lows. form over several months and volume will Broadening Pattern—can be recognized by its lows, all at about the same price level. Volume lows at roughly the same price level. Volume Volume diminishes and price swings between remain high during formation. Prices create successively higher highs and lower lows, which diminishes at each successive low and finally reflects weakening of downward pressure, an increasingly narrow range. Before the triangle higher highs and lower lows in a broadening form after a downward move. The bullish pattern bursts as the price rises above the highest high, tending to diminish as it forms, with some reaches its apex, the price breaks out above pattern, then the trading range narrows after is confirmed when, usually on the third upswing, confirming as a sign of bullish price reversal. pickup at each low and less on the second low. the upper trendline with a noticeable increase peaking highs and uptrending lows trend. The prices break above the prior high but fail to fall Bearish Counterpart: Triple Top. Finally the price breaks out above the highest in volume, confirming the bullish continuation breakout direction signals the resolution to below this level again. Bearish counterpart: high to confirm the bullish signal. of uptrend. Triangles can also appear during a a new trend—upward (Diamond Bottom) or Megaphone Top. Bearish counterpart: Double Top. downtrend, signaling a bearish continuation. downward (Diamond Top) out of the diamond’s boundary lines. Upside Breakouts Flags & Pennants Head & Shoulders Rounded Bottoms Wedges Bullish: An Upside Breakout occurs when Bullish or Bearish: Flag follows a steep rise in Bullish: This pattern is created by three Bullish: This pattern follows a downtrend, Bullish or Bearish: A Continuation Wedge the price breaks out through the top of a price (“flagpole”). It’s marked by two parallel successive price declines following a significant forming a gradual bowl shape reflecting a consists of two converging trend lines. Like a trading range marked by horizontal trendlines around a period of consolidation downtrend. The lowest low (head), is flanked shift in the balance of supply and demand. Triangle, but its apex slants downwards at an boundary lines across the highs and lows. as volume subsides. Flag can be horizontal by two higher lows at roughly the same level Volume tends to mirror the price pattern. After angle. As it forms over time, volume diminishes This bullish pattern indicates that prices may or slightly downward. Price breaks the upper (shoulders). Volume highest for first two relative inactivity at the bottom of the bowl, the and trend appears downward, but long-term rise explosively over a period of days or weeks trendline marking a resuming bullish uptrend. declines, then diminishes through right shoulder. price pattern starts upward turn. As sentiment range is still upward. Bullish pattern is as a sharp uptrend appears. Pennants converge rather than parallel. Volume surges as price closes above the turns, volume tends to increase. Bullish pattern confirmed when prices break above the upper Bearish counterpart: Downside Breakout. Bearish flags occur during a steep drop in price neckline to confirm the bullish reversal. is confirmed when price crosses above its trendline. A bearish wedge appears with with the flag horizontal or slightly upward. Bearish counterpart: Head and Shoulders Top. moving average. converging trendlines pointing slightly upward. StreetSmart Edge features Chart Pattern Recognition tools provided by Recognia. © 2017 Recognia, Inc. StreetSmart Edge™ is available to qualified Schwab Active Trading clients only. Schwab does not recommend technical analysis as a sole means of investment research. Recognia is not affiliated with Schwab. Schwab makes no judgment or warranty with respect to accuracy, timeliness, completeness, or suitability of information. It is presented for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Past performance is no guarantee of future results. ©2017 Charles Schwab & Co., Inc. All rights reserved. Member SIPC. (0611-4138) (06/11) Recognia® in StreetSmart Edge Online Help Find educational material for any Technical Event® Custom Alerts Add alerts for any security or Technical Event Technical Lookup Look up all Technical Event opportunities for a particular security.
Load more

Recommended publications
  • Stock Chart Pattern Recognition with Deep Learning
    Stock Chart Pattern recognition with Deep Learning Marc Velay and Fabrice Daniel Artificial Intelligence Department of Lusis, Paris, France [email protected] http://www.lusis.fr June 2018 ABSTRACT the number of patterns recognized implies having a human examining candlestick charts in order to deduce signal char- This study evaluates the performances of CNN and LSTM acteristics before implementing the detection using condi- for recognizing common charts patterns in a stock historical tions specific to that pattern. Adding different parameters data. It presents two common patterns, the method used to to modulate ratios allows us to tweak the patterns’ charac- build the training set, the neural networks architectures and teristics. This technique does not have any generalization the accuracies obtained. potential. If the pattern is slightly outside of the defined Keywords: Deep Learning, CNN, LSTM, Pattern recogni- bounds, it will not be detected, even if a human would have tion, Technical Analysis classified it otherwise. Another solution is DTW3 which consists in computing 1 INTRODUCTION the distance between two time series. DTW allows us to Patterns are recurring sequences found in OHLC1 candle- recognize a pattern that could vary in size and length. To stick charts which traders have historically used as buy and use this algorithm, we must use reference time series, which sell signals. Several studies, notably by Bulkowski2, have have to be selected by a human. The references must gener- found some correlation between patterns and future trends, alize well when compared with signals similar to the pattern although to a limited extent. The correlations were found to in order to capture the whole range.
    [Show full text]
  • Forecasting Direction of Exchange Rate Fluctuations with Two Dimensional Patterns and Currency Strength
    FORECASTING DIRECTION OF EXCHANGE RATE FLUCTUATIONS WITH TWO DIMENSIONAL PATTERNS AND CURRENCY STRENGTH A THESIS SUBMITTED TO THE GRADUATE SCHOOL OF NATURAL AND APPLIED SCIENCES OF MIDDLE EAST TECHNICAL UNIVERSITY BY MUSTAFA ONUR ÖZORHAN IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PILOSOPHY IN COMPUTER ENGINEERING MAY 2017 Approval of the thesis: FORECASTING DIRECTION OF EXCHANGE RATE FLUCTUATIONS WITH TWO DIMENSIONAL PATTERNS AND CURRENCY STRENGTH submitted by MUSTAFA ONUR ÖZORHAN in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Computer Engineering Department, Middle East Technical University by, Prof. Dr. Gülbin Dural Ünver _______________ Dean, Graduate School of Natural and Applied Sciences Prof. Dr. Adnan Yazıcı _______________ Head of Department, Computer Engineering Prof. Dr. İsmail Hakkı Toroslu _______________ Supervisor, Computer Engineering Department, METU Examining Committee Members: Prof. Dr. Tolga Can _______________ Computer Engineering Department, METU Prof. Dr. İsmail Hakkı Toroslu _______________ Computer Engineering Department, METU Assoc. Prof. Dr. Cem İyigün _______________ Industrial Engineering Department, METU Assoc. Prof. Dr. Tansel Özyer _______________ Computer Engineering Department, TOBB University of Economics and Technology Assist. Prof. Dr. Murat Özbayoğlu _______________ Computer Engineering Department, TOBB University of Economics and Technology Date: ___24.05.2017___ I hereby declare that all information in this document has been obtained and presented in accordance with academic rules and ethical conduct. I also declare that, as required by these rules and conduct, I have fully cited and referenced all material and results that are not original to this work. Name, Last name: MUSTAFA ONUR ÖZORHAN Signature: iv ABSTRACT FORECASTING DIRECTION OF EXCHANGE RATE FLUCTUATIONS WITH TWO DIMENSIONAL PATTERNS AND CURRENCY STRENGTH Özorhan, Mustafa Onur Ph.D., Department of Computer Engineering Supervisor: Prof.
    [Show full text]
  • Point and Figure Relative Strength Signals
    February 2016 Point and Figure Relative Strength Signals JOHN LEWIS / CMT, Dorsey, Wright & Associates Relative Strength, also known as momentum, has been proven to be one of the premier investment factors in use today. Numerous studies by both academics and investment ABOUT US professionals have demonstrated that winning securities continue to outperform. This phenomenon has been found Dorsey, Wright & Associates, a Nasdaq Company, is a in equity markets all over the globe as well as commodity registered investment advisory firm based in Richmond, markets and in asset allocation strategies. Momentum works Virginia. Since 1987, Dorsey Wright has been a leading well within and across markets. advisor to financial professionals on Wall Street and investment managers worldwide. Relative Strength strategies focus on purchasing securities that have already demonstrated the ability to outperform Dorsey Wright offers comprehensive investment research a broad market benchmark or the other securities in the and analysis through their Global Technical Research Platform investment universe. As a result, a momentum strategy and provides research, modeling and indexes that apply requires investors to purchase securities that have already Dorsey Wright’s expertise in Relative Strength to various appreciated quite a bit in price. financial products including exchange-traded funds, mutual funds, UITs, structured products, and separately managed There are many different ways to calculate and quantify accounts. Dorsey Wright’s expertise is technical analysis. The momentum. This is similar to a value strategy. There are Company uses Point and Figure Charting, Relative Strength many different metrics that can be used to determine a Analysis, and numerous other tools to analyze market data security’s value.
    [Show full text]
  • Moving Average Convergence Divergence (MACD)
    Understanding Technical Analysis : Moving Average Convergence Divergence (MACD) Apart from candlestick chart pattern indicators, traders or analysts often use the Hi 74.57 Moving Average Convergence Divergence (MACD) and Relative Strength Index Potential supply (RSI) in technical analysis of financial security. Like the candlestickdisruption chart indicators, due to MACD is also used to identify any trend pattern movement. attacks on two oil Brent tankers near Iran What is MACD? WTI Momentum • MACD is a momentum oscillator indicator WTI Oscillator which is used to identify trend formation Lo 2,237.40 (24 Mar 2020) • MACD shows a relationship betweenLo 18,591.93 two (24 Mar 2020) Moving moving averages of a financial instrument. • It combines price points of an instrument over Averages a specified time frame, divided by the number of data points, to give a single trend line Simple Moving Average (SMA) Exponential Moving Average (EMA) • The most basic MA, which is just a • A type of moving average that gives straight calculation of the mean price more weight to recent prices which of a set of values over a given time involves three steps. periods. • The SMA is computed first. Next, we • If you were to calculate the SMA for a must calculate the multiplier for ten-day period, you would take the weighting the EMA. The final step summed value of the last ten days involves the use of formula to and divide the result by ten. compute the current EMA. Level 6, Kenanga Tower, 237 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia. Tel: (603) 2172 3888 Fax: (603) 2172 2729 Email: [email protected] Website: www.kenangafutures.com.my How MACD works? MACD is generated by subtracting the long term EMAs (26 period) from the short term EMAs (12 periods) to form the main line known as MACD line.
    [Show full text]
  • Candlesticks, Fibonacci, and Chart Pattern Trading Tools
    ffirs.qxd 6/17/03 8:17 AM Page iii CANDLESTICKS, FIBONACCI, AND CHART PATTERN TRADING TOOLS A SYNERGISTIC STRATEGY TO ENHANCE PROFITS AND REDUCE RISK ROBERT FISCHER JENS FISCHER JOHN WILEY & SONS, INC. ffirs.qxd 6/17/03 8:17 AM Page iii ffirs.qxd 6/17/03 8:17 AM Page i CANDLESTICKS, FIBONACCI, AND CHART PATTERN TRADING TOOLS ffirs.qxd 6/17/03 8:17 AM Page ii Founded in 1870, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and market- ing print and electronic products and services for our customers’ professional and personal knowledge and understanding. The Wiley Trading series features books by traders who have survived the market’s ever-changing temperament and have prospered—some by re- investing systems, others by getting back to basics. Whether a novice trader, professional, or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future. For a list of available titles, visit our web site at www.WileyFinance.com. ffirs.qxd 6/17/03 8:17 AM Page iii CANDLESTICKS, FIBONACCI, AND CHART PATTERN TRADING TOOLS A SYNERGISTIC STRATEGY TO ENHANCE PROFITS AND REDUCE RISK ROBERT FISCHER JENS FISCHER JOHN WILEY & SONS, INC. ffirs.qxd 6/17/03 8:17 AM Page iv Copyright © 2003 by Robert Fischer, Dr. Jens Fischer. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. PHI-spirals, PHI-ellipse, PHI-channel, and www.fibotrader.com are registered trademarks and protected by U.S.
    [Show full text]
  • Identifying Chart Patterns with Technical Analysis
    746652745 A Fidelity Investments Webinar Series Identifying chart patterns with technical analysis BROKERAGE: TECHNICAL ANALYSIS BROKERAGE: TECHNICAL ANALYSIS Important Information Any screenshots, charts, or company trading symbols mentioned are provided for illustrative purposes only and should not be considered an offer to sell, a solicitation of an offer to buy, or a recommendation for the security. Investing involves risk, including risk of loss. Past performance is no guarantee of future results Stop loss orders do not guarantee the execution price you will receive and have additional risks that may be compounded in pe riods of market volatility. Stop loss orders could be triggered by price swings and could result in an execution well below your trigg er price. Trailing stop orders may have increased risks due to their reliance on trigger pricing, which may be compounded in periods of market volatility, as well as market data and other internal and external system factors. Trailing stop orders are held on a separat e, internal order file, place on a "not held" basis and only monitored between 9:30 AM and 4:00 PM Eastern. Technical analysis focuses on market action – specifically, volume and price. Technical analysis is only one approach to analyzing stocks. When considering which stocks to buy or sell, you should use the approach that you're most comfortable with. As with all your investments, you must make your own determination as to whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results.
    [Show full text]
  • Accumulation/Distribution Line -- Chart School
    Accumulation/Distribution Line -- Chart School Chart School Accumulation/Distribution Line Introduction - Volume and the Flow of Money There are many indicators available to measure volume and the flow of money for a particular stock, index or security. One of the most popular volume indicators over the years has been the Accumulation/Distribution Line. The basic premise behind volume indicators, including the Accumulation/Distribution Line, is that volume precedes price. Volume reflects the amount of shares traded in a particular stock and is a direct reflection of the money flowing into and out of a stock. Many times before a stock advances, there will be period of increased volume just prior to the move. Most volume or money flow indicators are designed to identify early increases in positive or negative volume flow to gain an edge before the price moves. (Note: the terms "money flow" and "volume flow" are essentially interchangeable.) Methodology (Click here to see a live example of the Acc/Dist Line) The Accumulation/Distribution Line was developed by Marc Chaikin to assess the cumulative flow of money into and out of a security. In order to fully appreciate the methodology behind the Accumulation/Distribution Line, it may be helpful to examine one of the earliest volume indicators and see how it compares. In 1963, Joe Granville developed On Balance Volume (OBV), which was one of the earliest and most popular indicators to measure positive and negative volume flow. OBV is a relatively simple indicator that adds the corresponding period's volume when the close is up and subtracts it when the close is down.
    [Show full text]
  • Trade Clustering and Power Laws in Financial Markets
    Theoretical Economics 15 (2020), 1365–1398 1555-7561/20201365 Trade clustering and power laws in financial markets Makoto Nirei Graduate School of Economics, University of Tokyo John Stachurski Research School of Economics, Australian National University Tsutomu Watanabe Graduate School of Economics, University of Tokyo This study provides an explanation for the emergence of power laws in asset trad- ing volume and returns. We consider a two-state model with binary actions, where traders infer other traders’ private signals regarding the value of an asset from their actions and adjust their own behavior accordingly. We prove that this leads to power laws for equilibrium volume and returns whenever the number of traders is large and the signals for asset value are sufficiently noisy. We also provide nu- merical results showing that the model reproduces observed distributions of daily stock volume and returns. Keywords. Herd behavior, trading volume, stock returns, fat tail, power law. JEL classification. G14. 1. Introduction Recently, the literature on empirical finance has converged on a broad consensus: Daily returns on equities, foreign exchange, and commodities obey a power law. This striking property of high-frequency returns has been found across both space and time through a variety of statistical procedures, from conditional likelihood methods and nonpara- metric tail decay estimation to straightforward log-log regression.1 A power law has also been found for trading volume by Gopikrishnan et al. (2000)andPlerou et al. (2001). Makoto Nirei: [email protected] John Stachurski: [email protected] Tsutomu Watanabe: [email protected] We have benefited from comments by the anonymous referees, Daisuke Oyama, and especially Koichiro Takaoka.
    [Show full text]
  • Profiting with Chart Patterns.Book
    Profiting with Chart Patterns by Ed Downs Profiting with Chart Patterns November 2016 Edition BK-02-01-01 Support Worldwide Technical Support and Product Information www.nirvanasystems.com Nirvana Systems Corporate Headquarters 9111Jollyville Rd, Suite 275, Austin, Texas 78759 USA Tel: 512 345 2545 Fax: 512 345 4225 Sales Information For product information or to place an order, please contact 800 880 0338 or 512 345 2566. You may also fax 512 345 4225 or send email to [email protected]. Technical Support Information For assistance in installing or using Nirvana products, please contact 512 345 2592. You may also fax 512 345 4225 or send email to [email protected]. To comment on the documentation, send email to [email protected]. © 2016 Nirvana Systems Inc. All rights reserved. Contents Chapter 1 Confirming Entries & Managing Exits What is a Pattern? ..........................................................................................................1-1 Psychology of Support Bounces ....................................................................................1-2 Goals of Chart Pattern Analysis.....................................................................................1-3 Chapter 2 Tools of the Trade 7 Chart Pattern Method..................................................................................................2-1 Pattern Timeframe .........................................................................................................2-2 Prior Move Test .............................................................................................................2-3
    [Show full text]
  • Everything You Wanted to Know About Candlestick Charts Is an Unregulated Product Published by Thames Publishing Ltd
    EEvveerryytthhiinngg yyoouu wwaanntteedd ttoo kknnooww aabboouutt ccaannddlleessttiicckk cchhaarrttss by Mark Rose • Read candlestick charts accurately • Spot patterns quickly and easily • Use that information to make profitable trading decisions Contents Chapter 1. What is a candlestick chart? 3 Chapter 2. Candlestick shapes: 6 Anatomy of a candle 6 Doji 7 Marubozo 8 Chapter 3. Candlestick Patterns 9 Harami (bullish / bearish) 9 Hammer / Hanging Man 11 Inverted Hammer / Shooting Star 13 Engulfing (bullish/ bearish) 14 Morning Star / Evening Star 15 Three White Soldiers / Three Black Crows 16 Piercing Line / Dark Cloud Cover 17 Chapter 4. The history of candlestick charts 18 Conclusion 20 Candlestick Cheat Sheet 22 2 Chapter 1. What is a candlestick chart? Before I start to talk about candlestick patterns, I’d like to get right back to basics on candles: what they are, what they look like, and why we use them … Drawing lines When you look at a chart of market prices, you can usually choose from line charts or candlestick charts. A line chart will take its price levels from the opening or closing prices according to the timeframe you have selected. So, if you’re looking at a one-minute line chart of closing prices, it will plot the closing price for each one-minute period – something like this … Line charts can be useful for looking at the “bigger picture” and finding long-term trends, but they simply cannot offer up the kind of information contained in a candlestick chart. Here is a one-minute candlestick chart for the same period … 3 At first glance, it might look a little confusing, but I can assure you that once you’re used to candlestick charts – you won’t look back.
    [Show full text]
  • Option-Implied Term Structures
    Federal Reserve Bank of New York Staff Reports Option-Implied Term Structures Erik Vogt Staff Report No. 706 December 2014 Revised January 2016 This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in this paper are those of the author and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author. Option-Implied Term Structures Erik Vogt Federal Reserve Bank of New York Staff Reports, no. 706 December 2014; revised January 2016 JEL classification: G12, G17, C58 Abstract This paper proposes a nonparametric sieve regression framework for pricing the term structure of option spanning portfolios. The framework delivers closed-form, nonparametric option pricing and hedging formulas through basis function expansions that grow with the sample size. Novel confidence intervals quantify term structure estimation uncertainty. The framework is applied to estimating the term structure of variance risk premia and finds that a short-run component dominates market excess return predictability. This finding is inconsistent with existing asset pricing models that seek to explain the variance risk premium’s predictive content. Key words: variance risk premium, term structures, options, return predictability, nonparametric regression. _________________ Vogt: Federal Reserve Bank of New York (e-mail: [email protected]). The author is especially thankful to his dissertation chair, George Tauchen, and his dissertation committee members, Tim Bollerslev, Federico Bugni, Jia Li, and Andrew Patton, for their guidance and encouragement.
    [Show full text]
  • JNK [High Yield Bond ETF] Weekly Chart – 14-Period RSI Relative
    JNK [High Yield Bond ETF] Weekly Chart – 14-Period RSI Relative Strength Index Signals Bullish Divergence Forming in High Yield Market Prices have defined a downtrend throughout calendar 2018, reaching the lowest level to begin Q3 (not pictured) Momentum on the other hand may be signaling support for a near-term advance, as the RSI held a higher low, remaining above the 40 level for the past three weeks as of this writing. However, gains will likely be limited by resistance at the MA Line, currently running parallel to a long-term downtrend line at the 36.40 level. If prices manage to break above resistance, with a concurrent rise above 50 RSI, that would be a signal to remain long. Alternatively, lower RSI readings indicating weak momentum would further establish that level of resistance. Longer-term, it appears a symmetrical triangle pattern may be forming on the weekly chart, implying a continuation of the recent downtrend. The downside price target for a breakaway from this pattern is $33.70 representing a 5.5% drop from current levels, coincidentally equal to the annual yield of this market. JNK [High Yield Bond ETF] Weekly Chart – 50 Week Moving Average Moving Average Line Overlays Long-term Falling Resistance Throughout Calendar 2018 Downloaded from www.hvst.com by IP address 192.168.160.10 on 09/29/2021 [High Yield Bond ETF] Daily Chart – Trading Volume w/ 50-Day MA Prices Test 2018 Lows in July, Reverse Closing Higher by End of Holiday Week High Yield Corporate Bond prices rose throughout July (not pictured) meeting resistance for a second time in as many months at the 36 level.
    [Show full text]