1. Reversal Pattern (Trend Reversal Signal)
1. Bullish reversal (falling to rising)
- Double bottom (W bottom)
- Pattern: The price fell to similar lows twice and rebounded, forming a W, with the line connecting the middle high points as the neckline.
- Logic: The price failed to break through the bottom twice, the support is strong, and the shorts are exhausted.
- Tips: Buy when the neckline is broken and the volume is large, and set the stop loss below the neckline or the second low point.
- Multiple bottoms (breaking bottom)
- Pattern: The price fluctuates at a low level for more than three times and finally breaks through the upper edge of the range.
- Logic: Repeated bottoming out without creating new lows, bulls are accumulating momentum.
- Tips: Volume must be increased when breaking through, and positions can be increased when the price falls back to support.
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- Pattern: First slowly fall out of the arc bottom (U-shaped), and after the bottom oscillates, it slightly pulls back to form a "cup handle" and then breaks through the upper edge.
- Logic: The bearish trend is weakening, and the cup handle is a wash-out action.
- Tips: The amplitude of the cup handle is less than 1/3 of the cup body. Enter the market with large volume when the cup handle is broken through. The target is the height of the cup body.
2. Bearish reversal (up to down)
- Head and Shoulders
- Pattern: Three high points are formed during the rise (the highest in the middle is the head, and the left and right are shoulders), and the line connecting the low points below is the neckline.
- Logic: The right shoulder has not exceeded the head, and the bulls are weak.
- Tips: If the price falls below the neckline and the volume increases, short sell, and set the stop loss above the neckline or the high point of the right shoulder.
- Rising Wedge
- Pattern: Prices converge during the rise (the slope of the upper track is smaller than that of the lower track), and the increase narrows.
- Logic: The bulls lack momentum and the trend is fading.
- Tips: short sell when the price falls below the lower track, and set the stop loss at the high point of the upper track of the wedge.
2. Continuation Patterns (Trend Continuation Signals)
1. Bullish Continuation (Upward Continuation)
- Ascending triangle
- Pattern: The low points gradually rise during the rise, the high points are suppressed by the same resistance line, and eventually break through the resistance.
- Logic: Buyers continue to strengthen, breaking through resistance to continue the upward trend.
- Tips: Increase volume when breaking through resistance, set stop loss below the support line, and target the height of the triangle.
- Rising Flag
- Pattern: After a rapid rise (flagpole), it enters a downward sloping parallel channel for consolidation (flag surface), and then breaks through the upper edge.
- Logic: The flag is for profit-taking, and bulls will regain momentum after consolidation.
- Tips: Flag consolidation is less than 2 weeks, with large volume when breaking through, the target is the length of the flagpole.
2. Bearish Continuation (Downward Continuation)
- Descending Flag
- Pattern: After a rapid decline (flagpole), it enters an upward sloping parallel channel for consolidation (flag surface), and then falls below the lower edge.
- Logic: The flag is a lure for buying, and the short position will continue.
- Tips: When the flag is consolidating, the volume will shrink, short sell when it falls below the lower edge, and set the stop loss at the upper edge of the flag.
- Descending Triangle
- Pattern: The high points gradually decrease during the decline, and the low points are supported by the same support line, and eventually fall below the support.
- Logic: The bears continue to strengthen, and the decline will continue if the support is broken.
- Tips: Increase volume when falling below support, set stop loss above the resistance line, and target the height of the triangle.
3. Undetermined direction pattern (needs breakthrough confirmation)
- Rectangular finishing
- Pattern: Price fluctuates sideways between horizontal support/resistance lines.
- Logic: long and short balance, waiting for direction selection.
- Tips: Break through the upper track for bullishness, break through the lower track for bearishness, confirm with large volume, and set the stop loss outside the opposite direction track.
- Expanding triangle (diverging triangle)
- Pattern: Price fluctuations become increasingly larger (higher highs, lower lows).
- Logic: There is a sharp divergence between bulls and bears, which may reverse or accelerate.
- Tips: Wait for a clear breakthrough direction, be sure to set a stop loss, and newbies should be careful.
**Key practical reminder**
1. **Trend priority**: The pattern must be combined with the overall trend (for example, when the overall trend is rising, the bullish pattern is more accurate).
2. **Trading volume verification**: A larger volume during a breakthrough is more reliable (no volume is mostly a false breakthrough).
3. **Time Frame**: Daily/weekly patterns are more reliable than shorter periods.
4. **Risk Management**: Any pattern may be a false breakthrough, so a stop loss must be set when entering the market (5%-10% position).
**Mantra**: Form is a tool, trend is king; large-volume breakthrough is accurate, stop loss is essential!
(Collecting ≠ making money, practice + risk control is the hard truth!)
