SMM Concepts Part 3

BECOME A PRO MONEY WILL FLOW FOCUS = SUCCESS! SMM CONCEPTS Part 3SMM Concept Part 3 2 INDEX Chart Patterns Introduction…………………………………………………….3 Bearish Reversal Chart Patterns..……………………………………………. 6 Bullish Reversal Chart Patterns……..……………………………………….10 Continuation Chart Patterns…………………………………………………..14Chart Patterns Introduction: • Stock prices are never constant. They move in a TREND (Up, Down or Sideways) • Stock Market and prices (trend) is driven by sentiments or expectations of investors and traders. Hence, a trend cannot stay the same forever. It is bound to change with the expectations of investors/traders. • Technical Charts reflect this changing behavior in the form of patterns or formations. • Chart Patterns are mainly categorized into: 1. Reversal Patterns (Trend Reverses) 2. Continuation Patterns (Trend Continues) 3Chart Patterns 4 1. Reversal Chart Pattern – These patterns, when appear, potentially reverses an existing trend. Example: bearish trend reverses to bullish and vice-versa 2. Continuation Chart Pattern – These patterns show that the existing trend is likely to continue. Hence, the word “Continuation”. Uses: i. Chart Patterns help you identify potential reversal or continuation. ii. They help you identify “Price Targets” and potential “Rewards”.Chart Pattern Types • Bearish Reversal Patterns  [ for Bears] 1. Head and Shoulder 2. Double Top • Bullish Reversal Patterns  [ for Bears] 1. Reversal Head and Shoulder 2. Double Bottom 3. Cup & Handle • Continuation Pattern 1. Flag & Pole 5Bearish Reversal Chart Patterns 6 Uptrend DowntrendHead and Shoulder (H&S) Pattern Hexaware weekly chart before 2008 bear market  [ for Bears] 7 Head & Shoulder is a reversal pattern that indicates change in the uptrend. Hexaware stock was in an uptrend for 3-4 years. It changed the direction in June 2007. Eventually the downtrend ended after it made a bottom near 20Head and Shoulder (H&S) Pattern 8 Ashok Leyland – May 2018 till date  [ for Bears] Left Shoulder Right Shoulder Head9 Double Top + False Breakout (M formation) Breakdown of major support after the double top Natural Gas – June 2014  [ for Bears]Bullish Reversal Chart Patterns 10 Downtrend Uptrend