[In-depth Interpretation of Candlestick Applications] - Issue Two (Reversal Patterns)
This article is a total of 800 words, takes 5 minutes to read, allowing you to have a basic understanding of reversal patterns. It is recommended to like ❤️ and bookmark 📖, so you won't have trouble finding it later.
I. Reversal Patterns
Reversal patterns usually occur at the top or bottom of the market, indicating that the current trend may reverse.
1️⃣ Head and Shoulders Top/Head and Shoulders Bottom
Description: The price forms a left shoulder, head, and right shoulder during an uptrend/downtrend, where the right shoulder fails to surpass the head, confirming the reversal upon breaking the neck line.
Target Price: The distance from the 'Head' to the 'Neck Line', used to calculate the target price downwards after breaking the neck line.
2️⃣ Double Top/Double Bottom
Description: The price forms two similar high/low points but fails to break the first high/low point; breaking the 'neck line' between the two high points confirms the reversal.
Target Price: The distance from the high point to the neck line, used to calculate the target price downwards after breaking the neck line.
3️⃣ Round Top/Round Bottom
Description: The price gradually forms an arc at the top, indicating that the buying/selling power is gradually weakening; breaking the arc bottom confirms the reversal.
Target Price: The distance from the highest point to the arc bottom, used to calculate the target price downwards after breaking.
4️⃣ V Top/V Bottom
Description: The price experiences extreme market conditions directly at the high/low point, then begins to reverse in a V shape, forming a single top or bottom.
This pattern is relatively rare, making it difficult to calculate the target.