The 4 most reliable price action patterns

The 4 Most Reliable Price Action Patterns [Type the document subtitle] What better way to minimize risk in day trading than to study the many patterns of the market? The only problem is that there are so many patterns, making it hard to know where to start. That’s why I’ve put together this list of four of the most reliable price action patterns on the market. In addition to this, I outline how they are recognized and defined so you know how to identify them and to act once you find them.

Saul 2015/01/26

Head and Shoulders Pattern This pattern is most often seen in an uptrend, where it is also at its most reliable state. It is marked by the market’s gradual steadiness, giving way to an environment of balance through supply and demand. Archival figures show that the Head and Shoulders price action pattern is continuously the most reliable.

Bullish Rectangle Pattern The bullish rectangle pattern is normally found in an uptrend, with indicators that the uptrend is set to persevere. It is said to be best to buy a stock undergoing this pattern just after the price succeeds the breakout point.

Triple Top Pattern The rule of three is the integral aspect of this triangular pattern, which begins in an upward trend. For the first three unsuccessful attempts from the buyer and sellers, the security is met with a similar support area. After the third attempt however, the security falls into a downward trend, thus making it a triple top pattern.

Double Top and Double Bottom Pattern The double top is referred to as a reversal trend in an upwardly motion. This pattern occurs when prices form two almost equivalent yet distinctive highs. The pattern is only completed when prices fall below both of said high points (which is often referred to as “the valley floor”).

Not surprisingly, the double bottom pattern is the opposite of this, however its success rate is statistically at least 3.5% higher than the double top pattern.