Freedom Stocks Top 5 Patterns To Trade

Follow Us on Stocktwits

1. Pennant Breakout

A pennant is created when a breakout occurs, followed by a period of consolidation, leading to another breakout (Above the consolidation channel/wedge). Pennants are very common on intraday charts with news and high volume. Example: A gap up during pre-market, followed by a sell-off or a gap up during market open followed by a sell off. After the sell off, the stock still holds above support and consolidates in a tight range. This leads to a breakout in the stock mid-day or going into close.

2. Cup And Handle

A cup and handle pattern is a curved u-shape with a handle below the second point of the u-shape sloped downwards. Cup and handle patterns occur on intraday charts or over a period of weeks. The pattern occurs when the share price declines, followed by a stabilization period, followed by a move of equal size to the prior decline (forming a U-Shape). The price than moves sideways/downwards forming the handle. Ideal entry is when the price breaks above the top channel of the handle.

3. Ascending Triangle

An ascending triangle pattern is an upward trend/momentum pattern. Ascending triangles can be identified on intraday charts or over a period of weeks. They’re known as bullish continuation patterns. This pattern occurs when the stock breaks out above the upper line (resistance) of the triangle. An influx in volume will normally confirm the breakout.

4. Flag Continuation

A flag continuation pattern occurs through a rectangular flag like shape. The rectangular flag forms from two trend lines which help identify the support & resistance levels. They are short term continuation patterns that are formed when there is a sharp movement in price, followed by sideways price movements. The pattern is then completed when another sharp movement in price heads in the same direction as the move that initiated the trend (bullish or bearish trend).

5. Inverse Head And Shoulders

An inverse head and shoulders is used as a predictor of a downward trend reversal. It forms from having one longer peak (the head) and two level shorter peaks on the left and right (shoulders) which create the head and shoulders pattern. This trend reversal is realized when the stock breaks below the trend line forming a bearish trend reversal, or above the trend like forming a bullish trend reversal.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top