Trading With Chart Pattern

#21
marcus said:
Soumya SRF dosen't really seem like an inverted head and shoulders, trading academy says the easier the pattern is to spot the more likely the reversal/continuation will occur. Also the volume is not in accordance as per Edwards and Magee. What is your opinion?
Chart Pattern Recognition is not a 100% science, there is some leeway.
as far as price pattern is concerned, i have found two distinct shoulders and a head. since it is a POSSIBLE candidate of this pattern i want to see how does the the volume pattern will span out?
Let see the experts view on volume :
Experts, including Murphy, maintain that the volume pick-up at the end of the pattern is essential. "If the volume pattern does not show a significant increase during the upside price breakout, the entire pattern should be questioned." Other experts, including Bulkowski, are not so convinced: "a low volume breakout is not an indicator of an impending failure."

marcus said:
Soumya just a quick question in Ruchi soya shouldn't the period between the two bottoms be atleast 3 months?
Bulkowski
The twin valleys are several weeks apart with most falling in 2 to 7 week range. Wider than 7 weeks and performance deteriorates.

StockCharts
The time period between troughs can vary from a few weeks to many months, with the norm being 1-3 months.

Happy Trading,
Soumya
 
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#28
Hello Friends,

How do we project the target price when the price breaks out in a particular chart pattern.

For example, soumya has indicated that the projected target in the Ruchi Soya Chart as 261 which was met eventually.. Can anyone explain how you arrive at the target price

Regards,
John.
 
#29
Hello Friends,

How do we project the target price when the price breaks out in a particular chart pattern.

For example, soumya has indicated that the projected target in the Ruchi Soya Chart as 261 which was met eventually.. Can anyone explain how you arrive at the target price

Regards,
John.
Hi John

If you go through the tutorials on different patterns in www.stockcharts.com, you can see the targets for each pattern explained under the heading "Target" or "Price Target".

Eg.: For H&S;
......
Price Target: After breaking neckline support, the projected price decline is found by measuring the distance from the neckline to the top of the head. This distance is then subtracted from the neckline to reach a price target. Any price target should serve as a rough guide, and other factors should be considered as well. These factors might include previous support levels, Fibonacci retracements, or long-term moving averages.
.....
Source: http://stockcharts.com/school/doku...._analysis:chart_patterns:head_and_shoulders_t

Regards,
Praveen.
 

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