Successful Trading Chart Patterns – Part 4 of 7


11. Rounding Top

In a rounding top, symmetry is an important distinction. The more dependable rounding top patterns do not wander from the boundaries of a firm semi-circle. Rounding tops can normally be in comparison to a head and shoulders pattern with two left shoulders, one head, and two right shoulders. Any patterns that change from this description can potentially be another pattern all together. If volume declines on each rally upward and the price keeps rising, search for divergent price and indicators, which may start the cost reversal any time.


12. Broadening Top

The broadening top is a unique pattern because it acts opposite of a normal consolidation. As time passes, price ranges and volatility increase, in place of decrease. Volume increases as the share prices rises due, which may be perplexed with bullish behavior. Rallies are short-lived and price drops remove previous support levels. Broadening tops are simply found in topping patterns since they’re the outcome of unrealistic expectations on behalf of bullish traders. Downside breakouts often lead to small declines pursued by a moment test of the breakout level. If the stock closes above this resistance level for any excuse, the pattern becomes invalid.

13. Triple Top

Triple tops may be either a reversal or continuation pattern, dependent on the strength of the trend and the trough levels opposite the tops. Triple tops that do not lead to a rectangle will often seem as if a head and shoulders pattern, a common reversal pattern. For a valid triple top, volume should decline on rallies toward the second and third top and increase into weakness. These volume trends confirm that distribution is coming about into strength. Although the lows made during the trough between the second and third tops will frequently exceed the response low, this specific price action is not needed during the development. No triple top is truly complete until the amount closes below the second trough’s low. Be mindful of small breakouts that immediately test the breakout level.


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