What are stock chart patterns?

Stocks do one of three things — trend upward, trend downward, or consolidate. Whatever the stock’s doing, patterns form. We call these chart patterns and traders like you use them to understand price action and build trading plans. This is the core of technical analysis and critical for traders. Patterns tell us what moves might happen.

What are the different types of chart patterns?

Charts fall into one of three pattern types — breakout, reversal, and continuation. Breakout patterns can occur when a stock has been trading in a range. The top of the range is resistance, and the bottom is support. If the stock breaks through either end of this range, it’s a breakout. When it breaks above resistance, we call it a breakout.

What is the pennant stock chart pattern?

The Pennant stock chart pattern shows that the stock price meets resistance during an uptrend, and the uptrend temporarily halts. Here you see lower highs but also a horizontal support line.

What is a gap pattern in stock charts?

A gap occurs when the price of a stock during a given period is significantly higher or lower than the price range of that stock for the previous period. The price did not overlap at all over the two periods. The 4 Main Types of Gap Patterns in Stock Charts. Breakaway Gap, Continuation Gap, Exhaustion Gap & Island Reversal Gap