Patterns are valuable tools for finding good short term trading opportunities. A pattern is a change in direction up or down in the price of stock. It reflects changing expectations. Patterns can develop over days, months, and years. Though no two patterns are the same, they are very close and can be used for predicting the price movements.
Some of the patterns that you must watch for if you wish to improve your short term trading opportunities include-
Head and shoulders pattern-this is one of the most reliable patterns and is a reversal pattern when a stock is topping out.
Triangles-when the range between the highs and the lows narrows it forms a triangle pattern. This occurs when the prices are topping out or are bottoming.
Double Tops-it occurs when prices rise to a certain point on heavy volume and then retreat.
Double bottoms-this occurs when prices fall to a certain point on heavy volume. They will then rise and fall back to the original level on lower volume.
To achieve success out of short term trading, make sure you understand the different patterns well. You can look out for tutorials and tips online to learn about the different tools for short term trading.
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