TECHNICAL ANALYSIS

Technical Analysis
Chart Patterns Continuation
Windows
Upward Tasuki Gap
Downward Tasuki Gap
Symmetrical Triangle
Ascending Triangle
Descending Triangle
Flags and Pennants
Wedges
 Technical Analysis
Windows
 Windows (or gaps) are an important concept in technical
analysis.
 A gap (current open is not the same as prior closing price),
means that no price and volume transacted hands between
the gap.
 A Gap Up occurs when the open of Day 2 is greater than the
close of Day 1.
 A Gap Down occurs when the open of Day 2 is less than the
close of Day 1.
 Once price gaps downward, the gap can act as resistance.
 When prices gap upwards, the gap can act as support to
prices in the future.
 Technical Analysis
Upward Tasuki Gap
 An Upside Tasuki gap is a formation that is commonly used
to signal the continuation of the current trend.
 It is a pattern that can be identified to support an uptrend.
 The first bar is a large white candlestick within a defined
uptrend.
 The second bar is another white candlestick with an opening
price that has gapped above the close of the previous bar.
 The last bar is a red candlestick that closes within the gap
between the first two bars. It is important to note that the
red candle does not need to fully close the gap.
 Technical Analysis
Downward Tasuki Gap
 An Downward Tasuki gap is a formation that is
commonly used to signal the continuation of the current
downtrend.
 First bar is a red candlestick within a defined downtrend.
 The second bar is another red candlestick that has
gapped below the close of the previous bar.
 The last bar is a white candlestick that closes within the
gap of the first two bars. It is important to note that the
white candle does not need to fully close the gap.
 Technical Analysis
Symmetrical Triangle
 A symmetrical triangle chart pattern represents a period
of consolidation before the price is forced to breakout or
breakdown.
 A breakdown from the lower trend line marks the start of
a new bearish trend, while a breakout from the upper
trend line indicates the start of a new bullish trend. The
pattern is also known as a wedge chart pattern.
 Technical Analysis
Ascending Triangle
 The ascending triangle is formed when the market makes
higher lows and the same level highs.
 These patterns are normally seen in an uptrend and viewed
as a continuation pattern as buying demand gain more and
more control, running up to the top resistance line of the
pattern.
 The trendlines of a triangle need to run along at least two
swing highs and two swing lows.
 A long trade is taken if the price breaks above the top of the
pattern.
 A short trade is taken if the price breaks below the
lower trendline
 A profit target is calculated by taking the height of the
triangle, at its thickest point, and adding or subtracting that
to/from the breakout point.
 Technical Analysis
Descending Triangle
 A descending triangle is formed when the market makes
lower highs and the same level lows. A descending triangle is
a signal to traders to take a short position to accelerate a
breakdown.
 These patterns are normally seen in a downtrend and viewed
as a continuation pattern as the bears gain more and more
control running down to the bottom support line of the
pattern.
 A descending triangle is detectable by drawing trend lines for
the highs and lows on a chart.
 Technical Analysis
Flags and Penants
 Flags and pennants are continuation patterns. They are
traded in the same way, but each has a slightly different
shape. The terms flag and pennant are often used
interchangeably.
 A flag or pennant pattern forms when the price rallies
sharply, then moves sideways or slightly to the downside.
This sideways movement typically takes the form or a
rectangle (flag) or a small triangle (pennant), hence their
names. Draw trendlines along the highs and lows of the
sideways price action. The sharp price rise preceding the
flag or pennant is called the flag pole.
 The sideways period is often followed by another sharp rise.
This is where the trading opportunity comes in. Once the flag
pole and a flag or pennant have formed, traders watch for
the price to breakout above the upper flag/pennant trendline.
When this occurs, enter a long trade.
 Technical Analysis
Wedge Formation
 Wedges are a multiple price wave and can be both a
continuation and reversal pattern.
 Wedges form when the waves of an asset move within a
narrowing range, angled either up or down.
 Unlike triangles which are formed by price moving sideways,
wedges can make significant progress either up or down.
 When the pattern completes, and the price breaks out of
wedge, it is usually in the opposite direction the wedge was
pointed. This is why it is called a reversal pattern. For
example, if a wedge is angled downward—called a "falling
wedge"—the price will often break above the top of the
pattern and rally. In the case of a wedge angled upwards—a
"rising wedge"—the breakout is typically to the downside,
indicating lower prices to come.
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