Technical Analysis Flashcards
Accending Triangle
An ascending triangle forms as the market hits a strong level of resistance, but a seriers of higher troughs indicate that the price is converging towards it. This pattern usuallyt signals that the price will move higher.
You should wait and trade the breakout.
Bearish Engulfing
This time a smaller green candle is engulfed by a larger red one - signifying a strong move lower.
Potential Direction = Downwards
Bullish Engulfing
A red candle immediatly followed by a larger green candle, suggesting a strong move upwards. The second candle’s body is so large it engulfs the former candle.
Potential Direction = Upwards Trend
Decending Triangle
A descending triangle works in the oppiste way to an ascending triangle. The market hits a level of support, but a series of sucessively lower peaks suggestss the price will move lower.
Doji
These have almost no body at all, meaning the opening and closing prices are nearly identical.
Doji’s are usually seen during consolation and market tops and bottoms. It can also indicate that the trend is about to reverse, as the convictions of buyers or sellers driving the market weaken.
Potential Direction = ?
Name
Predicted Direction / Signal
When to Trade
Projection?
Double Bottoms
Bullish - End of a reversal of a sustained downtrend
Above the Neckline
Increase is often likely to be equal to the distance from the neckline at its lowest peak. Can also form into a tripple
Name
Predicted Direction / Signal
When to Trade
Projection?
Double Tops
Indicates that the uptrend may of finished
Short Trade Below Neck Line - Bearish
Gives you a price target. Projected drop is likely to be equal to the distance from the neckline to the highest peak. Can also form into a tripple
Evening Star
The bearish version of the morning star, beginning with a green candle and ending with red. This indicates the reversal of an uptrend.
Potential Direction = Downwards
Falling Wedge
The line of resistance is steeper than the line of support, and usually signals that the price will rise.
Hammer
When seen during a downtrend, this candle can signify the market is about to go up.
For a particually strong signal, the lower wick of the hammer must be at least twice as long as the body and there should be little of no upper wick. Colour not too inportant, but green hammers tend ot be more bullish than red ones.
Potential Direction = Upward
Hanging Man
The same shape as a hammer, also signifiying a reversal, but this time formed during an uptrend. Colour aint inportant, but red candle tends to be more bearish.
Potential Direction = Downwards
Head and Shoulder - Normal
Indicates a reversal from a upward trend. If neckline sloping down this is an even better indication of reversal
Head and Shoulder - Inverse
Indicates a reversal from a downward trend. If neckline sloping up this is an even better indication of reversal
Inverted Hammer
A similary bullish candle which can be seen in a downtrend can signal that the market ius about to move higher. The only difference to a standard hammer is the upper wick is long while the lower wick is very short (or non-existent)
Potential Direction = Upward
Merabuzo Candles
Large body, very little of no wick. These show buyers or sellers have pushes or lowered the price signficatly from open to close.
Two types of Resitance?
Morning Star
A three-candle pattern indicating a reversal in a downtrend. The first candle is red, the second is a spinning top or a doji, and the thirs if green. Traditionally, the “star” should gap lower on entry and then gap higher on exit into the third candle.
However, 24-hour markets typically have few gaps so traders tend to ignore this requirment.
Potential Direction = Upwards
Retangles
Rentangle perids mark a consolidation period in the current trend before moving higher or lower. The market usually ends up trading in the same direction as before.
Rising Wedge
The line of support is steeper than the resistance line. This signals that the price will push lower.
Shooting Star
Another reversal candle occuring during an uptrend. Same shape as the inverted hammer.
Potential Direction = Downwards
Spinning Tops
These have small bodies and wicks that are roughly the same legnth above and below. they tend to indicate indecision in the market.
This shows consolidation
Potential Direction = ?
Support
Symetrical Triangle
Symetrical triangles show there is no clear trend efore the triangle, the market is equally likely to breeak out either to the upside or downside.
Three Black Crows
The bearish version of three white soldiers, seen after an uptrend reverses. Three consecutive red (or black) candles with large bodies and small wicks appear.
Potential Direction = Downwards
What are the three types of Channels?
What are the three types of trends? Including its confirmation statement?
Confirmation: Trend lines are only confirmed if the price touches them at least three times
Three White Soldiers
A very strong bullish signal occuring after a downtrend reversal. Conssits of three green (oor white) candles with large bodies and small wicks.
Potential Direction = Upwards
Tweezer Bottoms
A reversal pattern occuring a downtrend. A tweezer occurs when two candles find support at the same level and begins to reverse. The first candle is red, while the second candle is green.
Potential Direction = Upwards
Tweezer Tops
The opposite of tweezer bottoms, indicating the reversal of an uptrend. Here two candles hit resistacne at hte same level, the first being green and the second red.
Potential Direction = Downwards
