From:
shivamantri
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A rounding bottom chart pattern looks similar to a cup and handle pattern but without the handle. A rounding bottom, also referred to as a saucer bottom, is a long-term reversal pattern that signals a shift from a downward trend to an upward trend.
From:
shivamantri
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A cup and handle chart is a bullish continuation pattern in which the upward trend has paused but will continue in an upward direction once the pattern is confirmed.
From:
shivamantri
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Flag and Pennant are two short-term chart patterns. These are continuation patterns that are formed when there is a sharp price movement followed by a generally sideways price movement.
From:
shivamantri
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Triangles are some of the most well-known chart patterns used in technical analysis. The three types of triangles, which vary in construct and implication, are the symmetrical triangle, ascending and descending triangle.
From:
shivamantri
Views: 1146
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Head and shoulders is a reversal chart pattern that when formed, signals that the security is likely to move against the previous trend.
Slide 1: Bhavishya
Elliot Wave Theory
Slide 2:
The Elliott Wave theory is based on how groups of people behave.
Slide 3:
Mass psychology with swings from pessimism to optimism and back is described as the basis for the patterns the Elliott wave is suppose to identify.
Slide 4:
The Elliott Wave Principle is named after Ralph Nelson Elliott who did most of his work on wave patterns in the 1930s and 1940s.
Slide 5:
Mr. Elliott contends that social, or crowd behavior trends can be recognized in the price trend activity in the financial markets.
Slide 6:
Elliott came up with thirteen patterns or "waves," that he suggested recur in the markets.
Slide 7:
Linking those waves together he suggested helps to identify larger versions of those same patterns that occur over longer periods of time.
Slide 8:
The basic patterns in Elliott's theory is what is known as impulsive waves and corrective waves.
Slide 9:
An impulsive wave is made up of five sub waves and moves in the same direction as the larger price trend.
Slide 10:
A corrective wave is made up of three sub waves and moves against the trend of the next larger size.
Slide 11:
For a more in-depth discussion on the Elliott Wave patterns there are many books available on the topic including Elliott Wave Principle, by A.J. Frost and Robert Prechter.
Slide 12:
The Elliott Wave principles have a strict definition for what ultimately proves to be a valid wave formation and therefore should be understood and used carefully as confirming evidence in making trading decisions.
Slide 13:
The principles are meant to indicate potential, or probabilities of possible future price action in the market.
Slide 14:
Some wave patterns have lower probabilities of giving indication of future price action than others and strongly bias the investor to understand the principles behind the theory first before interpreting market action based on wave analysis.
Slide 15:
On the graph, the first small sequence is an impulsive wave ending at the peak labeled (1).
Slide 16:
The larger price trend is up and the end of the small sequence of waves is also the beginning of a larger sequence of waves shown with numbers in brackets on the graph.
Slide 17:
This is not followed by a corrective wave but what appears to be another impulsive wave of two peaks and three troughs.
Slide 18:
Then a corrective wave occurs labeled with the letters A,B and C.
Slide 19:
This wave ends at the 3rd point in the larger wave pattern (in brackets on the graph). Two more impulsive waves complete the larger wave pattern.
Slide 20:
There is a tie in to the Fibonacci sequence that Elliott believed was significant.
Slide 21:
Fibonacci numbers are a series of numbers that are in a sequence such that each successive number is the sum of the two previous numbers (1, 1, 2, 3, 5, 8, 13, 21, 34, 55 etc.).
Slide 22:
Elliott believed that the number of waves that exist in the stock market's pattern is reflected in the Fibonacci sequence of numbers.
Slide 23:
Fibonacci numbers are intriguing in that any number is approximately 1.618 times the preceding number and approximately 0.618 the following number.
Slide 24:
There is a good resource for further investigation of Fibonacci numbers written by Edward Dobson called Understanding Fibonacci Numbers.
Slide 25:
Generally, the Elliott wave theory says that market price moves in recurring wave patterns.
Slide 26:
Small wave formations link together to form larger wave formations.
Slide 27:
There is some value in being aware of the theory and knowing how to apply the theory to financial markets.
Slide 28:
In certain instances, the small corrective waves, labeled with the letters A, B and C, can be identified quite clearly especially after secondary corrections in the overall markets.
Slide 29:
Usually the price action between A and B is a period of expanding volume.
Slide 30:
The price action between B and C often form with diminishing volume and after C, price is said to have broken out of the pattern and is usually accompanied by increasing volume.
Slide 31:
This is sometimes the start of the next primary swing in prices.
Slide 32: For
more information just log on to www.bhavishya.net
