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Price chart is the result of activity of all market participants. It reflects period of high expectation, greed and fear. As most emotional human activities it presents different patterns. Chart analysis and pattern recognition provide useful information for technical analysis, trend analysis and market timing signals for technical trading. Trendlines and chart patterns can be analyzed in different time frames from intraday, daily and weekly frames up to multi year patterns. It is the best practice to analyze patterns in conjunction with other technical indicators. Each price pattern is formed by several smaller sub waves. It is required at least 3 – 4 sub waves to perform the reliable pattern screening. We use minimal required number of sub waves for earlier pattern recognition screener. On the other hand pattern formed with more sub waves is more reliable.

Chart Analysis and Chart Pattern Recognition – Ascending Triangle Pattern

The ascending triangle is a variation of triangle formation that has a flat resistance line and rising support line. The higher lows indicate the increasing demand and give the ascending triangle definitive bullish bias. The ascending triangle usually represents an accumulation stage in bullish market. The ascending triangle is considered as continuation pattern especially in uptrend, but it may also mark a reversal in downtrend. Volume usually increases on breakout. After breakout (similar to rectangle) resistance may tern into potential support and visa versa.
Ascending Triangle Screening page presents a list of stocks forming Ascending Triangle Pattern.
Tips:
# 1 As continuation pattern ascending triangle usually appears within the young trend characterizes by natural long-term indicators and overbought short-term indicators. Ascending triangle reset short-term indicators to natural and then continue movement in parents direction.
# 2 As reversal formation ascending triangle appears in mature downtrend characterized by oversold short-term and long-term indicators. This situation usually generates bullish divergence on long-term indicators.
# 3 For the best results chart patterns should be considered together with other technical analysis signals and technical trading techniques.
Estimated Target: the main trend support/resistance line.

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Bear flag, bull flag, bearish pennant and bullish pennant chart patterns represent a brief pauses after a sharp move in a dynamic market. They are considered as most reliable continuation patterns. Flags are characterized as short-term channels slanting against the main trend. Pennants represent short-term triangle formations. Volume is heavy during the sharp move preceding the formation.
Trading technique:
# 1 Flags and pennants present an additional opportunity to enter the dynamic market.
Tips:
# 1 Usually flags and pennants represent short-term pauses technically required in order to reset overbought/oversold technical indicators to allow farther movement. They likely to appear in earlier stage of the larger patterns when short-term technical indicators are grossly overbought/oversold but long-term indicators are in the middle range. In situation when both long and short-term indicators are overbought (oversold) flags and pennants have more chances to become the beginning of larger formation. Flags and pennants considered invalid as soon as they break the parent formation trend line.
# 2 As continuation pattern rectangle usually appears within the young trend characterizes by natural long-term indicators and overbought/oversold short-term indicators. Rectangle reset daily CTI to natural and then continues movement in parent?s direction.
# 3 For the best results chart patterns should be considered together with other technical analysis signals and technical trading techniques.
Estimated Target: projected support/resistance level of larger trend.

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Broadening Formations including Broadening Ascending Wedge present an inverted triangle patterns. They start with narrow fluctuations, and then widen with diverging boundary lines. The pattern where one of the boundary lines is horizontal refers as a right-angled formation. Broadening formations usually mark the reversal and confirmed with technical indicators.
Broadening formations Screening page presents a list of stocks forming Broadening formation Pattern.
Tips:
# 1 As reversal formation Broadening formation Pattern appears in mature trend characterized by overbought/oversold long-term and short-term indicators. This situation usually generates divergence on long-term indicators.
# 2 For the best results chart patterns and trend resistance support should be considered together with other technical analysis signals and technical trading techniques.