In this post, we are going to learn how the bearish chart pattern works in various markets. We know as well that in the market, there are many bearish chart patterns performed and every chart pattern has its work And its interpretation.
Let me tell you how every chart pattern works in the market. That is the simple theory to learn. First of all, you must know about the candlestick and market trends because the chart pattern works according to the market trend. If there are no trends and market following in the market, Chappy. Then maybe any chart pattern will work. Till now I haven’t seen any candlestick patterns or chart patterns that work properly in choppy markets.
Because in a choppy market, there is not any kind of trend available so trade doesn’t confuse to take the trade. I know that trading chart patterns are the backbone they play a main important role in trading carriers. But if you do trade without deep knowledge then maybe bear a huge loss from the market.
A bearish chart pattern indicates the market will fall from this level. Chart patterns take too much time to perform because it’s made of a bunch of candlesticks. If you do trade in a higher time frame then it takes too long time maybe one day or more.
But if the bearish chart pattern is performed in a higher time frame then we can trust it and play on it for a long time. So we should wait for the formation of chart pattern on a higher time frame.
Table of Contents
Bearish Reversal Head and Shoulder chart pattern
This is a reversal chart pattern and it performs on top of the market its also known as a bearish chart pattern. It’s the combination of many candlesticks. If we consider about no of candlesticks it has around more than 30-40 candles in green or red colours. After formation, traders think the market will move downward. We are not sure the market go downside but there are possibilities. Here are some Important points traders must consider while trading head and shoulder chart patterns.
This chart pattern has three market peaks middle peak is higher than the other two peaks. Those peaks are called head and shoulder. The first peak is called the left shoulder second is called the head and the last one is called the right shoulder.
After the formation of head and shoulders trader must keep their mind. There are trendlines also that are going through the bottom of peaks. That trend line indicates that the market is reacting to this as a support level.
Traders should wait for the breakdown of the neckline. In my view trader should wait for a pullback or retest the nackline. If the nack line is not retested then the trader can wait for consolidation. Because safe entry brings more confidence and profit to traders.
How to trade with a triangle
A triangle is a reversal and continuation chart pattern. If that chart pattern performed on top of the market. There are possibilities that the market will start moving in the opposite direction. Because it belongs to the bearish chart pattern category.
By the way, there are three types of triangle chart patterns found in the market that pay their role according to formation.
Symmetrical Triangle ÷ This chart pattern mostly performs on the bottom or top. It has the role of reversing the market from top to bottom or bottom to top.
It has another one work If it’s performed on mid of trend then it has the power to continue the market in the same trend. It mostly does continuation and also performs on resistance or support.
Ascending Triangle ÷ Ascending triangle has three swings low and a horizontal resistance. In a swing low market makes the first low and the second one is above last last, after that next low will be made above the previous low. All of the lows are connected with a proper trendline that goes down to the upside.
In a triangle chart pattern market performed lows but did not break the last high market and traded on near resistance. In the triangle chart pattern market has three touches dynamic support and horizontal resistance.
It plays its role in continuation, the market is going on the uptrend and formed an ascending triangle on top after the breakout market will start moving again in the same direction.
Descending Triangle – This is a technical bearish chart pattern formed with the help of a trendline where the price has a consistence downward and holds close to horizontal trendline support. The upper trendline typically drawn in a dynamic shape that’s indicates buyers are not in too much power and sellers are pushing the market downside along with a lower high.
You know as well a lower trendline works as a support and dynamic works like resistance. And dynamic trend line prevents the market from going upward. Descending a triangle is also considered its pay main role as a continuation chart pattern.
Traders can make decisions on triangle chart patterns for the future where the market can go one thing you must keep in mind is that technical analysis is an approach to analysing the financial market.
Bearish Chart Pattern Pole and flag chart pattern
Pole and flag is a continuation chart pattern that is performed after significant movement in the market. After the formation of this chart pattern, traders can forecast that the market can go downside. Because traders can expect the market has take a breath after a long downward and it will run again in the same direction.
This is a continuous chart pattern it is not a reversal chart pattern. So traders must keep this in mind after formation they should look for selling opportunities in the market. In this post we are reading about this is bearish chart pattern.
Pole =- The pole denotes the price has moved very strongly on the downside. The market has made consecutively bearish candles. It doesn’t have any bullish candle during this interval. It performs sometimes like News, results, and special events.
Flag =- After the formation of the pole, the market started moving in a rectangular shape. The market is stuck in a range. That indicates the market is in rest move or consolidating there. After consolidating market will move again on the downside.
Understanding the Double Top Pattern
This chart pattern belongs to the bearish chart pattern family. This one performs on the top of the market, after formation, there are possibilities the market can move downside. It’s also known as twin brothers playing with the market. It’s performed after an extended uptrend in a security price.
In this bearish chart pattern market performs two highs consecutively, but those high has a bit of a time-wise gap that is spataring by Vally. This chart pattern usually performs on the top of the market and resistance.
This chart pattern also has a neckline that is an indication market has reacted to that one as a support. If the market breaks it and starts moving in downside then we can confirm the market mood has changed into the bearish side.