Introduction to Chart Patterns - III

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Introduction to Chart Patterns - III


We have covered basic chart patterns in my earlier blog. Kindly visit Chart Patterns - An Introduction and Introduction to Chart Patterns II to have a peep into Head and Shoulders, Double Top and Double Bottom, Triple Tops and Bottoms, Symmetrical Triangle, Ascending Triangle, Descending Triangle and Cup with Handle. Here we will have a look into:

  • Falling Wedges
  • Rising Wedges
  • Rectangles 

Falling Wedges



Wedges mean a thick area on one end and tapering towards a thin edge. This is similar to Symmetrical Triangle pattern. Only difference here is the triangle is tapering downwards. This is considered as a bullish pattern. If you look closely it creates lower tops and lower bottoms.

Stock creates lowers tops (A-B- C) creating a resistance level  and lower lows (D-E-F) creating a support level. If the stock breaks the resistance level (G) which it will generally do, the stock is expected to rise. An Investor can invest in this stock by having a strict stop loss at support level. This also happens even if this pattern occurs in a downtrend.


Rising  Wedges



Rising wedges is a Bearish trend. Here the formation of the triangle is upwards. Pattern creates higher tops and higher bottoms. Level of resistance A-B-C is created and is difficult to break, whereas a support Level D-E-F is a rising support level. When stock breaches the support (D-E-F) it is expected to go further down, at least to a level of ‘D’ ad further down later. A trader can short sell the stock at point ‘F’ with a strict stop loss of level ‘C’. Trader can book the profits at level ‘D’ and might hold for more profits.  Same results occur even if this pattern occurs in uptrend or downtrend.







Rectangles is a continuation pattern. There is a area of indecision where stock moves within a specific range and once stock breaches the resistance level (in uptrend) will continue to rise where as if it breaches the support level (in downtrend)  will fall. The pattern is created when it creates higher levels (A-B-C)  and comes down creating a support (D-E-F) thus creating a rectangle shape.  The pattern is complete when it breaches the point ‘G’. Area of indecision is A-G in a rectangular form where it is difficult to make where is stock is heading.

In Downtrend the stock falls to a level of D-E-F and tries to rise but cannot go ahead of A-B-C level of resistance. Once the stock breaches the level of ‘G’ the stock falls and downtrend continues.

Happy and safe trading.


  • Sayantan Chakraborty

    can these thing be explained by price action ?

    • Hi Sayantan,
      I will try to explain by Price action for Rectangle Bullish pattern.

      Say a stock rises upto point ‘A’ say 95
      After touching 95 it goes down upto point ‘D’ say 87.
      A stock moves within a range of (A-B-C-G) i.e. 95 and (D-E-F) i.e. 87 creating a support. Once a stock trades beyond this range (upwards in this case over and above 95), the stock will head up continuing the uptrend. Target here will be the difference between A-B-C-G and D-E-F above point G. So 95 – 87 = 8 points above 95. So the target will be 103 with a stop loss of 95.

      • Sayantan Chakraborty


        can you explain it with a EOD chart ?

        thanks in advance

        • Hi Sayantan,

          The same can be used for EOD charts. Attaching a picture which will give you clear idea.

      • Sayantan Chakraborty

        Hi Mayuresh Rahatekar

        for your explanation;We hope few more valuable discussion on
        LEV,SEV,TEV modified by Shown and Active Boundaries by Pascal’s in
        coming sessions Or sires of your coming publications .


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