Found yourself playing the stock game but have no idea what you’re looking at?
Trading chart patterns can be extremely complex. Some can only be analyzed by experts.
In this short guide, you’ll walk through some of the strangest and rarest patterns in pricing.
Trading Chart Patterns
Thousands of market participants buy and sell stock every day. It’s a challenging process to keep up with, but trading chart patterns help put it all in perspective.
They provide a visual framework so that we may study the effects of supply and demand on a given subject. The information gained helps determine long-term and short-term market forecasts.
These patterns are also a way of viewing price actions. They’re monitored monthly, weekly, daily, and even intra-daily.
For more information on trading chart patterns – or just to see some for yourself – take a look at Tradingview charts. It’s a great tool for learning how these charts work.
Types of Weird Trading Chart Patterns
Some patterns can be a bit odd. Others tend to be extremely rare.
The Double Bottom
This pattern tends to occur when prices drop to distinct lows twice.
In many circumstances, prices fall to a support level. They eventually pull back up but tend to fall again before increasing – creating the “double bottom” effect.
The Rounded Bottom
Rounded bottoms are long and U-shaped, sometimes referred to as bowls and saucers.
The pattern forms a gradual, round, bowl shape. The curve remains smooth even through fluctuating pricing.
Right-Angled and Descending Broadening Formation
It’s a complicated name for a very complicated pattern. This pattern is coined by the broadening appearance of pricing accompanied by lows on decent.
The general design follows a trendline along the top. It forms what’s called the upper price boundary.
Alternatively, lows follow a downslope. It takes the eventual shape of a tilted megaphone.
Cup and Handle
Just as the name suggests, this pattern takes the shape of a cup and handle. Known as one of the easiest patterns to identify, this U-shaped pattern forms a cup.
The handle is formed when price pulls back to about a third of the cup’s advance. In most cases, prices will flow in the direction of said advance.
A vicious-sounding name with a toothy design, the Wolfe wave is actually quite common. The pattern typically occurs when supply and demand fight for equilibrium.
The waves can occur in just about any time and for any length of time. Their projections and scope tend to be extremely accurate, making them subject to exploitation.
The symmetry of this pattern is key. It takes the shape of sharp teeth gnashing together.
Have You Seen Weirder Charts?
This quick guide is only the tip of the iceberg. People are paid a lot of money to analyze these bizarre patterns for investors.
If you’ve had any experience in this realm, share them in the comments down below.