What TA patterns can you use to identify trend reversals or continuations?

There are many patterns in TA for trend reversals. But to be a trader you don't need to learn all. But need 2-3 patterns with backtest with better accuracy rate and higher RR ratio. 1) M pattern made on top, is a reversal pattern, which had a good accuracy rate. It works better if it is made around any round number level or resistance level. 2) W pattern, which is made after a fall, is a reversal pattern, it works better if it's made around the support level. 3) Ending Diagonal is an Elliot wave pattern, which tells us about the end of a trend, and the ending diagonal with RSI divergence (both bullish or bearish) has a higher accuracy rate. 4) Inverted hammer, and hammer also a reversal pattern which actually works in the market.

Among others, I have found Head and Shoulders and Inverse Head and Shoulders as one of the most potent trend reversal patterns. The former pattern is a reversal pattern that forms after an uptrend. It consists of three peaks – a higher peak (head) between two lower peaks (shoulders). The pattern suggests that an uptrend is losing momentum and a potential reversal to the downside might occur. The latter, the inverse head and shoulders pattern form after a downtrend. It comprises three troughs – a lower trough (head) between two higher troughs (shoulders). This pattern indicates that a downtrend is losing momentum and a potential reversal to the upside might occur.

Rudyard Kipling begins his poem "IF": “If you can keep your head when all about you Are losing theirs." That's an apt reversal indicator. Multiple patterns can signal a reversal. It's the concomitant atmosphere which delivers a clear vindication of major trend reversal. When the shoe shine boy offers stock tips was a classic in the 1920's. More recently when the store clerks are speaking Bitcoin & magazine lifestyle sections talk crypto currency, you can see the mania build. Chart patterns will help 'time' the bursting bubble. When the sound on the street is silence or outright cynicism - "I would never buy that!" - I go to my charts & wonder "If" there are signs of a bottom...

Strong rally in the S&P500 Index following an Inverse Head & Shoulders bullish reversal on the weekly chart between June 2022 and March 2023. A simple way to forecast the possible extend of the breakout rally is to measure the distance between the low price of 3500 in October 2022 and the resistance breakout price of 4200 in May 2023. Adding this 700-points increase to the resistance breakout price of 4200 indicates a potential forecast high of 4900 in the S&P500 Index. Following a run to a high of 4600, prices currently consolidating in a bull flag formation just above the 4200 level, now a support level. The potential completion of the technical pattern will depend on whether the 4200 level holds. Not Financial Advice, Just Education!

Here are some commonly used TA patterns to identify trend reversals or continuations: Reversal Patterns: Head and Shoulders: Three peaks, with the middle one being the highest, indicating a potential trend reversal. Double Top/Double Bottom: Two price peaks or valleys at the same level, suggesting a potential trend reversal. Reversal Patterns: Specific candlestick formations (e.g., Hammer, Shooting Star) indicating a potential trend reversal. Continuation Patterns: Triangle: Flat trend line with a rising or falling trend line, signaling a continuation of the respective trend. Moving Average Crossovers: When shorter-term mA cross above or below longer-term ones, indicating a potential trend continuation.

The simple outside range key reversal works well as a reversal indicator. It is beneficial for the close of the reversal bar be above the opening of the previous bar, Volume is crucial - the reversal bar should stand out with high, above average volume to indicate strong conviction behind the reversal. Lack of high volume makes the signal weaker. Following rest bars can help confirm the reversal - 1-3 bars of sideways or opposite reversal direction drift after the signal helps solidify the reversal before follow through. Follow through bars in the new direction add confidence - seeing the next bars continue the reversed direction vs fizzling out supports the validity of the reversal. Risk can be set using the high or low of signal bar.

Trend continuation is a pattern formed to signify an investor of another impulsive swing in the market after a series of accumulation and ranging phase in the market. Example of patterns are: Rectangle Ascending triangle Descending triangle Symmetrical triangle flag pennant These patterns can influence an early entry signal in a continuation of trend.

Trend continuation patterns are a temp. halt that tell you the stock is gearing up to resume its prior trend. Hence they form in the middle of a trend and therefore, their estimated target is generally the same magnitude of the move that had been witnessed prior to the temporary pause. There must be an established trend in the recent past before betting on such patterns, else there's no relevance of them and its better to ignore them if they form in a sideways market. They have a breakout/breakdown level that marks their completion and that is when a trade is taken for better confirmation. Popular names : Flag & Pole, Pennant, Cup & Handle, etc. Pro Tip: The best way to master them is to see them unfolding in real time, day by day.

It’s important to remember that technical analysis focuses on entry and exit strategies as well as predicting price changes, but using this as your only source of information will leave you behind and prevent you from future success.

One thing I have found helpful is that Technical Analysis if read alongwith Sentiment Anaylsis will always make a lot of sense. It always indicates the trend which usually also drives the market sentiment and accordingly those who do not follow the Technical Analysis Part of trading strategies and usually make decisions on the basis of their own emotions also drive the price movement and direction. Based on sentiments and emotions the retail traders decisions actually effect the volumes in a particular direction. Further under such circumstances the Fund Managers' smart money usually eats the dumb money of those who stick to their positions based on biases they hold.

There are different ways to engage with the patterns whether reversal or continuation, one common way to all of the patterns is "break and retest" of the market to the breakout zone and retest back to such zone. That will help determine the stop loss and profit level. Example a break out of a minor resistance which is a support also known as a neckline in a double or triple top formation pattern, and it is best to wait for the retest at the neckline with reversal candlestick formation pattern to sell off.

I have tried using technical analysis on some of my long-term investment calls but haven't found much success. The issue primarily is the noise that few signals create leading to exits or entries which are false triggers. I have tried using long-term averages, both simple and exponential but couldn't find success. I found an analysis that includes price movements compared to its earnings. This particular idea has helped me in entering assets that are out of favour, thereby making sizeable returns if the asset enters a bull phase. Exit calls could be a mix of TA or basis returns. For traders, TA works only if you have a strong mindset and money management in place to continue trading for a long period especially when not in your favour.

No this, there is no single pattern that is 100% guaranteed and profitable for a life time. We keep trading the opportunities and applying risk management. I love that so much when I see people doing that.

Technical analysis is just three things. 1 - price action 2 - your personal psychology of dealing your pnl with while being in the trade. 3 - Risk management i.e. nothing using a strict SL.