Reversal and Pullback Patterns
by PRASHANT SHAH -
Breakout patterns discussed so far were relatively simple to identify. A proper understanding of those setups will help you to better grasp the concepts and patterns explained in this section,which are relatively more advanced. Before considering reversal patterns, it is important to understand the difference between continuation and reversal patterns. Continuation patterns are those that ... Read more
Strike-Back Pattern
by PRASHANT SHAH -
We discussed the swing breakout pattern earlier. In the case of reversal patterns when the price moves back into the swing breakout territory, it is an early sign of a potential trend reversal. When bulls or bears strike back, it is an early indication of a potential reversal. A little further research helped me formulate ... Read more
Swing Engulfing
by PRASHANT SHAH -
I have borrowed this concept of engulfing from candlestick chart patterns. A bullish engulfing candle is one where the current price completely engulfs the body of the previous candle. With Renko charts, we plot a series of bricks which show price swings. When a swing move completely retraces the previous move, which was a swing ... Read more
Retracement Pullback Zone
by PRASHANT SHAH -
Fibonacci is a popular theory for retracements. We discussed Fibonacci ratios in Chapter 1. There are multiple theories to calculate retracement. Retracement ratio varies from 25% to 66%. We can refer to retracements between 25% and 66% as a retracement zone. It’s important to remember that there has to be a significant trend to start ... Read more
123 Pullback Pattern
by PRASHANT SHAH -
Bullish 123 Pullback During an uptrend, if the price retraces below the previous bullish swing breakout zone and then forms a reversal, it is a bullish 123 pullback pattern (see below chart). Bullish 123 pullback pattern: 1 — Bullish swing breakout at Point B is followed by at least three bullish bricks; 2 — A ... Read more
M and W Patterns
by PRASHANT SHAH -
M and W patterns can be easily identified and effectively traded on Renko charts. The plotting of the price action in a diagonal format in the Renko chart makes it easier to identify and trade these patterns. Have a look at below daily line chart of Century Textile. Now, have a look at below chart, ... Read more
