Technical Analysis Continued:

TECHNICAL ANALYSIS CONTINUED...

Chart Patterns: Select a Pattern

1-2-3 Continuation Pattern
2B Setup
Ascending Triangle
Avalanche
Basing
Bear Flag
Breakout
Bull Flag
Bull Trap
Congestion
Consolidation
Core Buy

Core Short
Cup-With-Handle
Head and Shoulders
Oops Daily Buy
Pennant
Phoenix
Reverse Head and Shoulders
Symmetrical Triangle
Trading Range
Wedge (See Pennant)

PHOENIX
Criteria:
1. Downtrend
2. Pullback higher of 3-5 bars comparable to or stronger than previous decline, usually off lows on high volume, to 20 simple moving average resistance
3. Hugs the moving average support on decreasing volume. 4-5 bars average.
4. Moving averages start to converge (10 and 20 sma if it's setting up on the 20 sma.)
Entry: Switch to smaller time frame and enter on a breakout in resistance and/or the 20sma.
Stop: Under previous or current day's lows on a daily setup. Usually I will use current day's lows or a break in intraday support.
Target: Next major simple moving average. For example, a setup on the 2 minute chart has a target of 5 minute 20 sma and a setup on the 5 minute chart has a target of the 15 minute 20 sma. Also watch for equal moves.

Example:

REVERSE HEAD AND SHOULDERS
General Criteria: Low (left shoulder) followed by a lower low (head) and then a higher low (right shoulder) which is comparable to the left shoulder.
Entry: Break higher from the neckline. The neckline connects the highs on either side of the head. Alternative and preferred entry is using a Phoenix to enter after the right shoulder has formed.
Stop: Under the past pivot low or 20 simple moving average support
Target: Previous reversal prices and resistance zones such as a 5 minute 200 sma if the setup occurs on the 15 minute chart. Also whole number resistance.

Example:

SYMMETRICAL TRIANGLE
Criteria: Lower highs and higher lows on decreasing volume.
Entry: Breakout from the trend lines on higher then average volume as the trend lines converge.
Stop: Under the lows of the base or last major pivot low on the smaller time frame or under the lows of the setup bar in the case of a buy.
Target: Equal distance on a breakout comparable to the distance between the first high and first low in the triangle.

Symmetrical triangles tend to resolve themselves in the direction of the overall trend. There are exceptions, mainly at strong resistance in the case of an uptrend or strong support in the case of a downtrend. This tends to be one of the more difficult patterns for trader's to learn to use successfully.

Example:

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