Triple Top Reversal Chart Pattern – Stock Analysis

The market and direct the stock back down to the support level. In this blog, Global Market Astro explains a significant chart pattern observed in day-to-day market charts i.e. Triple Top. These chart patterns serve as a vital tool in making global stock market trend forecasts.

TRIPLE TOP Reversal Chart Pattern

The triple top is a reversal chart pattern formed when a stock attempts to move beneath the key level of support in the direction of existing trend. This chart pattern signals the market’s effort to move a security in a certain direction. After three failure attempts, the buyers lose out hope, making the sellers to send the security in a downtrend.

Triple top is a bearish reversal chart pattern which is formed when a stock trending upward tests a similar level of resistance for three times without breaking the resistance. Every time the stock tests the resistance level, falls again to the similar level of support. After the third fall to the support, the pattern gets completed and the stock falls through the support and the stock price is expected to move downtrend.

The first step of this pattern is the formation of a new high in an uptrend that is slowed down by selling pressure, which forms a resistance level. The selling pressure initiates the stock price to fall until it finds a support level, as buyers involve again into the stock. The buying pressure sends the price once again up to the area of resistance the stock met earlier. Again, the sellers enter

This up-and-down movement gets repeated for the third time; but this time the buyers, after failing three attempts, give up on the stock, and the sellers take over. Upon falling through the support level, the stock is expected to move downtrend.

This pattern can be challenging to spot in the initial stages as it will firstly look like a double-top pattern. The most vital thing here is that one waits for the security price to move above the level of resistance before entering the trade, as the stock could just end up being range-bound, where it trades in between the two levels for some time.

In the triple-top formation, each test of resistance at the upper end should be aided with diminishing volume at each successive peak. And again, when the stock price breaks beneath the support level, it should be accompanied by high volume.

Once the signal is formed, the price objective is based on the chart pattern’s size or the price distance between the level of resistance and support. This is then deducted from the breakout point.

Source : https://www.globalmarketastro.com/blog/triple-top-reversal-chart-pattern/

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Island Reversal Gap Chart pattern - Technical Analysis

Global Market Astro has been explaining the types of gaps observed in the chart patterns used in stock market trend analysis. In this blog we brief about the Island reversal, a type of gap chart pattern.

ISLAND REVERSAL

Island reversal is a commonly observed chart pattern which is formed by a gap followed by a flat trading and then confirmed by another gap in the opposite direction. It is a strong signal of a top or bottom in a trend indicating an upcoming shift in the trend. 

The above is an example of island reversal which occurs at the end of a downtrend. It’s formed when an exhaustion gap appears in a downtrend followed by a flat trading period. The pattern is confirmed when an upward breakaway gap is formed in the price pattern.

The size of the trend reversal or the quality of the signal is dependent on the location of the island in the previous trend. If it happens near the commencement of a trend, then the size of the reversal will likely be less significant.

Source : https://www.globalmarketastro.com/blog/island-reversal-gap-chart-pattern/

Exhaustion Gap Chart Patterns

In this blog Global Market Astro briefs about a significant charts pattern observed in daily stock market charts. We have explained the exhaustion gap with illustrations for easy understanding of stock market charts and in making stock market trend analysis.

EXHAUSTION GAP

It is the last gap formed at the end of a trend and it signals a negative sign that the trend is about to reverse. This generally occurs at the last thrusts of a trend marked as hype or panic and it can also be a point when weaker traders start to move in or out. These exhaustion gaps are usually considered as either “a can’t-miss opportunity” or “avoid at all costs”.

To identify an exhaustion gap or the last large move of the trend, the gap should be marked with huge volume. The strength of the signal also gets increased when it appears after the stock has made a substantial move.

As the exhaustion gap signals a trend reversal, the gap is expected to fill. After the completion of exhaustion gap, the price will move sideways before moving converse to the prior trend. Once the price fills the gap, the pattern gets completed and signals a trend reversal.

Source : https://www.globalmarketastro.com/blog/exhaustion-gap-chart-patterns/

Runway Or Measuring Gap - Chart Pattern

In this blog, Global Market Astro briefs about the runaway gap or measuring gap. The runaway gap is a type of gap chart pattern used in stock market trend forecasts.

RUNAWAY GAP (OR) MEASURING GAP

A runaway gap is found around the middle of a trend, usually when the price has already started a strong move. It is a strong healthy signal as the trend will continue as it indicates continues, even raising, interest in the stock.

Once the security makes a strong move, the traders waiting on the side-line for better entry or exit may decide it not coming and if they wait further, will be missing the trade. This increased buying or selling creates runaway gap and continuation of the trend. Volume is not much important in runaway gap as in breakaway gap, but should be marked with average volume. If the volume is too extreme, it happens to be an exhaustion gap signalling the end of a trend.

The runaway gap forms support or resistance in similar manner as the breakaway gap. Also, the measuring gap does not frequently fill, and there’s cause for concern if the price breaches through the support or resistance, as it is a sign that the trend is weakening – and could even signal that this is an exhaustion gap and not a runaway gap.

source : https://www.globalmarketastro.com/blog/gaps-runway-measuring-gap/

Common and Breakaway Gaps In Charts

Global Market Astro has tried to explain the types of gap chart patterns used in stock market forecasts and in trend analysis in this blog. Let’s stream through the explanation and illustration for Common and breakaway gap chart patterns.

COMMON GAP

The common gap often occurs during the price movement of a security. It is not much significant like other gaps but is always worth to note down. These gaps occur when the security trades in a range and they will be smaller in terms of gap’s price movements. They occur as a result of general events such as low volume trading days or due to an announcement of stock split. These gaps get filled quickly and moves back to the pre-gap price range.

BREAKAWAY GAP

The breakaway gap generally occurs at the beginning of a market move after the security has traded in a consolidation pattern which happens when the price is non-trending within a bound range. It is referred as breakaway gap as it moves the security from a non-trending to a trending pattern.The breakaway gap is a good sign that the new trend has started.

A strong breakaway gap out of a consolidation period is taken to be much stronger than a non-gap move out. The gap indicates a large increase in sentiment in the direction of the gap, which will probably last for some time period, resulting to an extended move.

The strength of this gap and the accuracy levels of its signal can be confirmed by considering the volume during the gap. The larger the volume out of the gap, the more likely the security will continue in the direction of the gap, also reduces the chances of it being filled.

While the breakaway gap generally doesn’t fill like the common gap, it will in some cases. The gap will often provide support or resistance for the resulting move. For an upward breakaway gap, the lowest point of the second candlestick provides support. A downward breakaway gap provides resistance for a move back up at the maximum price in the second candlestick.

source : https://www.globalmarketastro.com/blog/common-and-breakaway-gaps-in-charts/

Chart patterns – Gaps and its types

In this blog, Global Market Astro explains the commonly observed chart pattern- the gap and its types in the upcoming blogs. Hope it gives a greater understanding for  the readers and helps them in making stock market forecasts.

GAP

A gap is an empty space generally occurring in a chart between one trading period and its previous trading period. These gaps usually form as a result of an important and material event that suddenly affects the price of the security such as earnings surprise or a merger agreement.

The gap in price movements are observed in bar and candlestick charts but not on line charts or point and figure charts. This is due to the reason that each and every point is connected in line, point and figure charts

These gaps occur in places where there is large enough variation in the opening price of a trading period where that price and the successive price movements do not fall within the range of the previous trading period. If suppose the price of a stock is trading at $30 and suddenly jumps to $37 in the next trading period, a large gap is formed over there.

There are four major types of gaps

• Common gap
• Breakaway gap
• Runaway gap
• Exhaustion gap
• Island reversal gap

Though these gaps are similar in structure, they differ only by the location in which they occur in the trend and the how they mean to the chartists in stock market trend analysis.

Source : https://www.globalmarketastro.com/blog/chart-patterns-gap-and-its-types/

Rising and Falling Wedges Chart Patterns - Global Market Astro

Global Market Astro takes its privilege in explaining the commonly observed chart pattern i.e. The Wedge in this blog. Hope it gives a greater understanding to the readers and aids them in stock market trend analysis

THE WEDGE

The wedge is a type of chart pattern that signals the reversal of trend which gets formed within the wedge. These wedges serve as a chart pattern tool in stock market forecast. The wedges are similar to that of the Symmetrical triangle chart patterns formed by the support and resistance trend lines. The only way in which they differ from symmetrical triangle is they last for longer periods from three to six months. The trend lines of the wedge generally slant in either upward or downward direction, which makes them differ from the uniform trend lines of the triangles.

TYPES OF WEDGES

Based on the slant pattern of the trend lines, wedges are classified as

1-FALLING WEDGE - sloping downward

2-RISING WEDGE - sloping downward

FALLING WEDGE

The falling wedge is generally a bullish pattern which signals the upward price break through wedge and to move uptrend. The trend lines in this pattern get slanted and converge in downward direction as the price is moving downtrend. Here the price movement bounces between the trend lines, which bound the price movements.

The common thing to look in a falling wedge is that the upper or resistance trend line should exhibit a sharper slope than the lower or support trend line. The flat nature of support trend line shows that the selling pressure has dropped down making it tougher for the sellers to push the price downwards.

The price movement of a wedge should at least test both the support and resistance trend lines twice during the lifetime of a wedge. The more it tests at the resistance level the quality of the wedge is considered to be high.

The buy signal is indicated if the price breaks through upper resistance trend line. This breakout should be at higher volume but due to the long term nature it should be confirmed that the price has successive closes above resistance line.

RISING WEDGE

The rising wedge is a bearish pattern that signals a downward movement in security price. The trend lines of a rising wedge slant and converge in an upward direction. The price movement fluctuates between two trend lines. Once the price moves towards the apex, the momentum weakens. The traders would view for a move below the lower support line for a reversal in uptrend. The sellers start to gain momentum as the buyers’ strength weakens because of the inability of the buyers to take price higher. The pattern gets completed once the sellers take control of the stock when the price falls below support line

Source : https://www.globalmarketastro.com/blog/wedges-rising-and-falling/

Descending Triangle Chart patterns

This blog briefs about the Descending triangle chart patterns often observed in stock market trading.

DESCENDING TRIANGLE :

The descending triangle is the contrary of the Descending triangle. It signals the upcoming bearish trends in the market, suggesting the price would trend downwards over the completion of this pattern. This descending triangle is formed by a flat support line and a downward slope resistance line. Like the Descending triangle, this pattern is usually considered to be a continuation pattern, as it is headed by a downward trend line. But again, it can be found in an uptrend. 

The first part of this pattern is the fall to a low that then finds a support level, which sends the price to a high. The next move is a second test of the previous level of support, which again sends the stock higher – but this time to a lower level than the previous move higher. This is repeated until the price is incapable to hold the support level and falls below, continuing the downtrend. 

This pattern shows that buyers would take the security higher, butcontinue to face resistance. After several attempts to push the stock higher, the buyers fade and the sellers overpower them, which sends the price lower. 

Source : https://www.globalmarketastro.com/blog/descending-triangle-chart-patterns/

Ascending Triangle Chart Patterns – Stock Market

In this blog Global Market Astro explains another type of triangle chart pattern observed in market-Ascending triangle chart pattern.

ASCENDING TRIANGLE :

The ascending triangle usually signals that the price of the security is tend to raise higher towards completion. This pattern is formed as a result of two trend lines forming an apex. One is a flat trend line acting as a point of resistance and an ascending trend line acting as a support for price. Generally the price of the security oscillates between these two trend lines until it breaks out to the upper side. This pattern is usually preceded by an uptrend, making it a continuation pattern

In this chart, the price moves to a high that faces resistance leading to a sell-off to a low. It follows another move higher, which tests the earlier resistance level. When failing to move past this resistance level, the security again sells off – but to a higher low. This continues until the price rises above the resistance level or the pattern fails. 

The ascending support line gives an indication that sellers are beginning to leave the security. Once the sellers are knocked out of the market, the buyers can carry the price above the resistance level and resume the upward trend. The pattern gets completed upon breakout above the resistance level, but it can fall below the support line so be careful when entering prior to breakout.

Source : https://www.globalmarketastro.com/blog/ascending-triangle-chart-patterns/

Symmetrical Triangle Chart patterns

In this blog Global Market Astro explains Triangle chart pattern formed in market trend charts.

TRIANGLES-EXPLAINED:

As the name clearly explains, these patterns form the shape of a triangle. These chart patterns are formed from the convergence of two trend lines being flat, ascending or descending, the price of the security moving between these trend lines.

There are three different types of triangles such as

1) Symmetrical triangle

2) Ascending triangle

3) Descending triangle

SYMMETRICAL TRIANGLE:

The symmetrical triangle is usually a continuation pattern that indicates a period of consolidation in a trend followed by a continuation of the former trend. It is formed by the convergence of a descending resistance line and ascending support line. The two trendlines causing the formation of this triangle should have a similar slope converging at a point termed as the apex. The price of the security will usually oscillate between these trendlines, towards the apex, and will breakout in the direction of the prior trend. 

If preceded by a downward trend, the focus should be on a break beneath the ascending support line. If preceded by an upward trend, look for a break above the descending resistance line. But, this pattern doesn't always lead to a continuation of the prior trend. A break in the opposite direction of the previous trend should signal the formation of a new trend. 

Above is an example of a symmetrical triangle that is headed by an upward trend. The first part of this pattern is the creation of a high in the upward trend, which is followed by a sell-off to a low. The price then moves to another high that is lower than the first high and again sells off to a low, which is higher than the previous low. At this point the trendlines can be drawn, which forms the apex. The price will continue to bounce between these lines until breakout. 

The pattern gets completed when the price breaks out of the triangle - look for an increase in volume in the direction of the breakout. This pattern is also susceptible to a return to the previous support or resistance line that it just broke through, so make sure to watch for this level to hold if it does indeed break out. 

Source :https://www.globalmarketastro.com/blog/symmetrical-triangle-chart-patterns/

Chart patterns | Cup and Handle

In this blog we are going to elaborate a chart pattern frequently observed in market trend analysis. Global Market Astro explains the cup and handle chart pattern in this blog.

CUP AND HANDLE CHART PATTERN

A cup and handle is a chart pattern of bullish continuation in which the upward trend movement has paused for a while and the upward trend will continue once the pattern gets confirmed.

In this figure the price patterns forms a cup which is preceded by an upward trend. A handle follows the cup which is generally a downtrend or sideway movement in prices. Once the price breaches the resistance in the handle, the uptrend continues. The patterns are formed in a wide range of timing, generally over a span of several months to more than a year.

Trading Double tops and bottoms

In this blog, Global Market Astro explains its blog viewers the commonly formed market price chart pattern - Double tops and Double bottoms.

DOUBLE TOPS AND BOTTOMS

It is a well-known trend reversal chart pattern. It is a commonly used chart pattern and is reliable. These chart patterns are formed after sustained trend and signals the trend reversals that are about to occur. These patterns are formed when the price trends test resistance or support levels twice and when they fail to break through it. These are used to signal intermediate and long term trend reversals.

In the double top the price tried twice to move upwards but failed and hence the trend reverses and moves downtrend. In case of double bottom the price tried to move lower twice but finds support and hence reversal occurs and heads upwards. 

Source : 

https://www.globalmarketastro.com/blog/trading-double-tops-and-bottoms/

Chart Patterns | Head and Shoulders

Global Market Astro explains the common chart patterns observed in the market charts and the cause & effects of the various chart patterns.

DEFINING CHART PATTERNS

A chart pattern is a distinctive formation on a stock chart that indicates a trading signal, or future price movements of the stock. Chartists use the chart patterns to recognise current market trends and trend reversals and to identify buy and sell signals.
There are two types of chart patterns within this area of technical analysis. The reversal and continuation. A reversal pattern indicates that a prior trend will reverse once the pattern gets completed. A continuation pattern indicates that a trend will continue upon completion of the pattern. These chart patterns can be commonly found in charts of any timeframe.

HEAD AND SHOULDERS

“Head and Shoulders” is the most common and reliable chart pattern. It is a reversal chart pattern when formed indicates that the stock is about to move against the previous trend. The Head and shoulders pattern comprises of four main components- two shoulders, one head and one neckline. Each head and shoulder comprises of a high and a low.

There are two types of Head and Shoulders chart patterns,

Top Head and Shoulders in first image formed at the high of an uptrend indicate the end of the upward trend.

The bottom Head and Shoulders or Inverse Head and Shoulders signals a reversal in a downward trend.

100% EQUITIES STRATEGY

This blog article of Global Market Astro explains the term “100% Equities Strategy” commonly used in Portfolio management.

100% EQUITIES STRATEGY-EXPLAINED

This is an investment strategy used in the portfolio of an individual or pooled fund like mutual funds, etc. This strategy only considers equity securities for the investments. The equities may be the stocks listed in stock exchanges or OTC over the counter stocks or even private equity shares.

Generally equities are considered as the risky asset class compared to other investment arenas, but the historical returns from equities are higher as well. Hence a well-diversified portfolio containing all stocks can minimize the individual company risk and even sector related risks. Hence the Mutual funds or ETFs mention “100% Equities Strategy” on their prospectus in order to inform the investors regarding the fund’s overall risk profile.

Source : https://www.globalmarketastro.com/blog/equities-strategy

Adaptive Price Zone Technical Indicator

In this blog Global Market Astro has elaborated about the technical indicator used commonly in non-potential markets, Adaptive Price Zone(APZ) in simpler vocabulary.

ADAPTIVE PRICE ZONE

Adaptive Price Zone (APZ) was developed by Lee Leibfarth. It is volatility based technical indicator which appears like a set of bands on a price chart. It is highly helpful in choppy and in non-potential markets. Adaptive Price Zone is a technical indicator that aids investors in identifying the possible market turning points in upcoming future.

CALCULATION METHODOLOGY

This technical indicator indicates significant price movements by using a set of bands established on short-term, double-smoothed exponential moving average that reacts rapidly to price changes with reduced lag. The exponential moving average of one more exponential moving average (EMA) is utilized to create a fast-reacting average.

An exponential moving average gives more weightage, to the recent price data in a specified range of period whereas a simple moving average (SMA) gives equal weightage to all data in a specified range of period. EMA responds rapidly to current fluctuation of prices and to the changes in market conditions. The APZ uses the closing prices of a five-period EMA of another five-period EMA.

The adaptive component of the APZ's calculation comes from its use of an adaptive range to quantity volatility. This volatility value is attained by calculating the five-period EMA of five-period EMA of the current high minus the current low:

Volatility Value = Five-Period EMA of Five-Period EMA of (High – Low)

The volatility value is then multiplied by a deviation factor (for example, a deviation factor of two) to generate the upper and lower bands. The deviation factor will affect the distance that the bands appear from average price; higher deviation factors will cover price more loosely, lower deviation values will follow price more closely. Once the volatility value has been multiplied by a certain deviation factor, the volatility value is added to create the upper APZ band, and deducted to determine the lower APZ band:

Upper APZ Band = (Volatility Value * Deviation Factor) + Volatility Value

Lower APZ Band = (Volatility Value * Deviation Factor) – Volatility Value

The adaptive price zone (APZ) can be particularly useful in a market that keeps on moving sideward. This can help the day traders to make profits even in volatile markets by indicating price reversal points, which can indicate potentially profitable times to buy or sell. The APZ can be applied as part of an automated trading system.

Ascending and Descending Channels

In this blog Global Market Astro briefs about Ascending and Descending channels, frequently used term in technical analysis.

ASCENDING CHANNEL

An ascending channel is defined as a price action confined between upward sloping parallel lines. Higher pivot highs and higher pivot lows are technical indicators of an uptrend market. Trend lines frame out the price channel by drawing the lower line on pivot lows, and the upper line is the channel line drawn on pivot highs. Price is not always perfectly contained but the channel lines show areas of support and resistance for price targets. A higher high above an ascending channel can signal continuation. A lower low below the low of an ascending channel can signal trend change.

Price channels show trend. A trader can trend trade in a channel or swing trade from support to resistance and back to support. In an uptrend, start with the lower trend line drawn on pivot lows and add a parallel channel line to complete the formation.

DESCENDING CHANNEL

A descending channel or downtrend is the price action contained between two downward sloping parallel lines. Lower pivot highs and lower pivot lows are a bearish signal. In a downtrend, a trade might be entered at the trend line and exited at the channel line. A lower low below a descending channel can signal continuation. A higher high above the low of an ascending channel can signal trend change.

Price channels show trend direction. The slope of the channel shows momentum. Here is a simple technical edge: start the down trend line using two lower pivot highs and stay short below the trend line.                                                                                                                          

Source: https://www.globalmarketastro.com/

DEFINING ABOVE AND BELOW THE MARKET

In this blog Global Market Astro has taken initiative to explain the common terms used in day to day market activities. We have explained the blog readers regarding “Above the market” and “Below the market” in simple words easily understood by the users.

ABOVE THE MARKET

“Above the market” may be defined as an order to buy or sell at a price chosen and set higher than the current market price value of a security.

Examples of above the market orders are: a limit order to sell, a stop order to buy, or a stop-limit order to buy.

This is approach that is regularly used by momentum traders. For example, a stop order would be placed above the resistance level to buy. If the security's price breaks through the resistance level, the investor may be able to participate in the upward trend.

BELOW THE MARKET

“Below the Market” is defined as an order to buy or sell a security at a price that is lower than the current market price value. For example, a trader can place a limit order to buy a stock at a specified price that is below the current price. Below the market, helps ensure that the desired price, or better, is achieved. 

It can also be a price or rate which is lesser than the current prevailing conditions in an open market. Goods or services that are sold at a price lower than the "going," or typical, rate can be said to be below the market.

Traders and investors who want to attain a better price or position may enter an order to purchase below the market. A limit order to buy allows traders to specify the value at which they are ready to buy a security; if the limit order to buy is filled, the order will be filled at the specified price or better. A below market order to sell allows traders to quickly unload a position.

Source : https://www.globalmarketastro.com/blog/above-and-below-the-market/