technical analysis at cgq

7/29/2019 technical analysis at CGQ

1/34


2/34


3/34


4/34

Classic Chart Patterns

Two types of patterns Reversal patterns which identify changes in market trend

Key reversal

Double and triple tops and bottoms

Head and shoulder tops and bottoms

Saucer bottoms

Continuation patterns which represents midcourse corrections

Flags

Pennants

Triangles

Wedges

Volume and open interest Confirmation of all the patterns.

Most patterns have measuring techniques which great

objectives for the next move.


5/34


6/34


7/34

Reversal Patterns

Common to all reversal patterns

There must be an identifiable trend.

Bottoms often have gradual basing and move with increased

volume

Topping patterns are much more volatile than bottoms.

The longer the trend is in place the more substantial the reversal

move.

First signal of a reversal is the violation of a trendline.


8/34


9/34

Double and Triple Tops

Very similar to the head and shoulders top.

Triple top has three peaks and two troughs as does the

head and shoulder.

The neckline connects the two troughs usually very little

slope.

Breakdown is achieved by braking the neckline and testing

the breakdown point and holding it.

Distance from top to neckline provides a downside

objective for both double and triple top.


10/34


11/34


12/34


13/34


14/34

Head and Shoulders

The top formation has three high peaks with the middle

peak higher than the other two.

Characteristics

The is symmetry in the shoulders either simple or complex.

Neckline can have an up or down slope.

Neckline slope is normally not very steep.

Breakout of the pattern is penetration of the neckline on high

volume and a test of the neckline which must hold.


15/34

Source: chartpatterns.com


16/34


17/34


18/34

Rounded Bottom or Saucer Bottom

Saucer bottom is gradually rounding bottom.

According to Investors Business Daily, a very high

percentage of stock bottom with this formation.

Bullish reversal pattern.

Price curves up to a level closed to the congestion level at

the beginning of the saucer.

Retraces down to form the handle of cup and takes out the

recent high with high volume to start bull move.


19/34


20/34

Continuation Patterns

Triangles

Symmetrical

Ascending

Descending

Flags

Pennants

Rectangular Formations


21/34

Symmetrical Triangle

Forms two trendlines the descending line has lower highsand the ascending line has higher lows.

Usually breaks out of the triangle in the same direction itentered the triangle. Continuation.

There are normally three waves within the triangle. The closer the price gets to the apex of the triangle the

higher the probability of a false breakout.

Volatility get lower as the trading ranges get smaller.

Volume also recedes, The distance from the beginning of the trend to the entry

into the triangle creates a profit objective upon exit from thetriangle.


22/34




23/34

Ascending Triangle

The triangle is create by horizontal top and an ascending

upward trendline.

Breakout is upward through the horizontal line.

Also has a three wave count within the triangle.

Breakout should be accompanied by high volume.

Often the breakout point will be tested on a retracement

and holds.


24/34




25/34


26/34

Descending Triangle

Descending triangle is created by a horizontal trendlinealong the bottoms and a down sloping trendline connecting

highs.

Market usually enters in a downward direction and exits to

the down side. Continuation pattern. There is usually a three wave count within the triangle

formation.

Breakout is normally accompanied by high volume.


27/34


28/34

Flags and Pennants

Flags and pennants represent a rest after a sharp move. This createsthe flag or pennant pole.

Pennants then form a symmetrical triangle at the top of the pole. As a

continuation pattern the breakout is in the same direction as the price

entered the pennant.

Flags then form a small trend channel. Bullish trend is a declining trend

channel and a bearish trend forms an ascending trend channel.

Both tend to have a three wave formation, breakout with higher volume,

and test the breakout point.

All trends need to take a rest, this behavior results in these continuation

patterns.

Within the consolidation period volume and volatility tends to contract.

Expands on breakout.


29/34



30/34


31/34

Rectangular or Sideways Market

A rectangle is a continuation pattern in which there is ahorizontal trading range where the highs and lows are at

the same level. A horizontal trend channel describes the

market action.

Volume and volatility consolidate within the rectangle andexpands as the market exits the formation.

The rectangle can also be a high or low the key is to trade

in the direction of the breakout of the trading bracket, either

direction.


32/34


33/34


34/34

1 800-525-7082 www.cqg.com

technical analysis at cgq

Documents