Introduction to Price Patterns


   
So far in our The Technician: Technical analysis series we have covered Dow Theroy, Support & Resistance, Trendlines, Channel lines, Fan Principle, Climax & Island Reversal. Now, we are all set ot begin price patterns.

Price Patterns:

According to John J Murphy, "Price Patterns are pictures or formation which appear on the price charts of stock or commodities, that can be classified into different categories, and that have predictive value"

In our previous post we discussed about trend analysis, which explains the overall direction of price movement. If price is making higher highs and lower lows, it will be uptrend and if it is making lower highs and lower lows it is downtrend. But, at times we see price action to be moving sideways. It is the sideways movement in the price when the analyst has to decide whether the trend will continue or it is going to reverse. There can be two types of price patterns:

1) Reversal Pattern- Reversal patterns when occur Indicate that a major change or shift in trend is going to take place. Means if the stock is in uptrend reversal patterns suggest that the stock may start correction soon while if a stock is in downtrend the occurrence of reversal patterns would suggest that the stock will begin upmove soon. Our aim while learning these patterns will be to spot the reversal as early as possible

2) Continuation Pattern- While a stock is in consolidation mode or is moving sideways the occurrence of continuation pattern signals that the stock's ongoing trend prior to consolidation will continue. Here, also is to spot such signals at right time and to get benefited from it.

We will be discussing both these price patterns in our coming posts. In order to make sure you can make most of them please go through the following major lessons, in order to form a strong base for upcoming lessons:






Happy Learning
The Stock King


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23 comments

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SauriN PateL
AUTHOR
March 3, 2015 at 11:36 AM delete

Can I buy fortis malad hospital? ?

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smartstudnt
AUTHOR
March 3, 2015 at 5:06 PM delete

Sir is Kilitch Drug a classic case of undervaluation as performancewise its profits and turnover has already doubled compared to LY within 9 months of CY, it has cash bal of Rs30/-share and reserves of more than 100cr. company did well between 2008 to 2011 and then sold its few plants to multinational and paid 300% spl div to shareholders in 2012 now since last few quarters growth is also good also no debt no pledge promoter stake 65% with good management so then why stock should be at 35 when markets in bull run? have i missed some aspect pls guide and can it atlst appreciate to one third value of CMP Anuh Pharma.Also sitting on huge land which market value runs in hundreds of crores so should i buy it now or wait further?

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March 3, 2015 at 7:40 PM delete

Abhi.. How to come up with which method a particular stock to be analysed?? Throw some light on this na..

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SauriN PateL
AUTHOR
March 3, 2015 at 9:12 PM delete

Can I avh polyplex corp? ? I bought at 250..

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SauriN PateL
AUTHOR
March 3, 2015 at 10:33 PM delete

Lawreshwar poly ki buy price kab krni chahia??

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March 3, 2015 at 10:55 PM delete

50 would be ideal price to entry it...........

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March 3, 2015 at 11:03 PM delete

bro if we look at sales and profit figures the performance of kilitich have declined significantly in past 2-3 years the sales which was once more then 146 crores yearly in 2011 has now declined to 14.9 crore in march 2014 year also the profits have declined and this year the company is overall in losses so far.................. technically it is at support levels so can bounce up to 37-38 but for long term better look for other options....................anuh can give good returns

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March 3, 2015 at 11:03 PM delete

go through 4 links provided in above post......................... regards

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March 3, 2015 at 11:05 PM delete

polyplex is at support levels of should bounce from here

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March 3, 2015 at 11:07 PM delete

expected to correct now so wait for dips

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Kushal Shah
AUTHOR
March 4, 2015 at 2:00 AM delete

what is your view on icici, pnb, bank of baroda and itc? Should I enter at cmp in all this stocks? they should go up in next few months?

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SauriN PateL
AUTHOR
March 4, 2015 at 8:43 AM delete

Sir can I buy kridhan infra??

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March 4, 2015 at 10:30 AM delete

I entered Phoenix Lamps @ 100. I heard that promoters are selling completely. Can I wait or quit?

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March 4, 2015 at 2:53 PM delete

all these are good picks but wait for a week before new entry................

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March 4, 2015 at 3:05 PM delete

avoid kridhan infra not good according to me

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March 4, 2015 at 3:05 PM delete

the stock is in strong downtrend and as it is near ur puchase price my advice is to exit...........

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Anonymous
AUTHOR
March 4, 2015 at 5:20 PM delete

Is it good to buy ECO Board for long term

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March 4, 2015 at 6:27 PM delete

should be avoided according to me

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SauriN PateL
AUTHOR
March 4, 2015 at 10:16 PM delete

Plz may I knw the reasons? ?

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March 5, 2015 at 1:09 PM delete

what makes a stock grow is increse in its financial figures, incase of kridhan the sales and profit figures are stagnant when compared with previous years but the price has already made a run up from 35 to 350 levels, its not bad but future growth drivers are not visible .......................... my personal views u should always undertake ur own analysis and go for what u feel is right. Regards

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