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Principles of Technical Analysis: The Cup-and-Handle Pattern. The cup-and-handle pattern is aptly named because it resembles a teacup with a handle. On a stock chart, the cup appears as 'U' shape. The handle appears as if it had the shape of a backslash symbol or '\'. The cup and handle is a bullish continuation pattern.
The MTA is a nonprofit association that fosters an environment of ethics and professionalism among Chartered Market Technicians (CMTs). In addition to maintaining a dynamic communication network for members, the MTA educates the public about technical analysis and the role of technical analysts in the market. MTA members are bound by the ...
Technical analysis can only increase the probability of making a correct swing trading decision. Great trading opportunities, however, do have signatures. For starters, many indicators all give the same message within a short period of time (about 2-3 days).
The head and shoulders pattern consists of four distinct parts: The left shoulder, the head, the right shoulder, and the neckline. Each of these four must be present for the formation to exist. The Left Shoulder: Visualize a stock rising from $55 to $85, a gain of more than +50%. Next, suppose the stock then hits a short-term peak and forms a ...
Springs and upthrusts are false breakouts that can trap the unsuspecting trader. Both patterns quickly reverse, with the stock or index then often testing the opposite end of the trading range. A spring is a false breakout to the downside. It is so-named because prices 'spring' back. An upthrust is the opposite event -- when prices temporarily ...
Charts. Starting with the three assumptions from the introduction, 1) market action discounts the future, 2) prices move in trends, and 3) history repeats itself, technical analysts then turn to charts. A chart is a visual representation of price action, showing whether the stock moved higher or lower on any given day.
Like other technical analysis patterns, being able to predict a turn in a trend adds one more tool investors can use to find portential entry and exit points. The pattern can provide for early entry into reversals, but without confirmation (such as from momentum divergences), trading key reversals can prove to be a very high-risk strategy.
Traders can assess volatility by using the Chicago Board Options Exchange Volatility Index (VIX), which indicates the level of bullish or bearish sentiment
Principles of Technical Analysis: The Predictive Power of the RSI Trendline. Trendlines are one of the most common and helpful tools in a trader's kit. They are used to show a stock 's upwards, downwards, and sometime sideways, movement. As I mentioned in my recent article, The Trend Is Your Friend (where I described trendlines in-depth ...
A doji represents a supply/demand equilibrium -- a tug-of-war where neither the bulls nor bears are winning. In the case of an uptrend, the bulls have by definition won previous battles because prices have recently moved higher. Now, the outcome of the latest skirmish is in doubt. Meanwhile, after a long downtrend, the opposite is true.