Chart patterns or price formations are patterns that are seen on asset price charts, the price is forming these patterns and are the basis of technical analysis. They seek to measure the reactions of market participants, whether they are euphoric or fearful and act accordingly. In other words, they have predictive value.
Traders study and analyse price patterns and formations and important areas of support and resistance, in order to make investment decisions.
There are several formations, those that announce a change of trend and those that only show a consolidation in the current trend (trend continuation formations or patterns).
Trading Chart Patterns with streak
As main price patterns we can mention:
- Shoulder head shoulder
- Double roof and triple roof
- Double floor and triple floor
- Circular ridge
- wedges (belonging to the triangle family) – triangles (belonging to the triangle family)
- Ranges or rectangles
- ABCD waves
- Cup with handle
Which we will see in detail in the following lessons.