iCharts Discussions

[savnish]

can any one tell me reversal chart patterns that are not mentioned in books

[amitkbaid1008]

Yes there is one which I call U-TURN

Following should be observed while checking whether any stock in U-TURN

For reversal of uptrend

1. Stock should be in confirmed uptrend and trend should also be visible on charts.
2. Open price should be higher than previous day's high
3. Today's high should be highest of previous 10-12 days
4. Today's close should be lower than previous day's close
5. Today's close should also be lower than previous day's open

This will form a kind of "BEARISH ENGULFING" candle at top. One can go short with stop loss at today's high. Targets can be fixed using Fibonacci.

Here is an recent example of SESAGOA which formed such pattern on 09-04-2010

Stock was in uptrend as evident from chart
Open price was 495 > 494 which was previous day's high
495 was highest price as seen in chart
Close of 468.75 was lower than previous close of 490.65
Close of 468.75 was also lower than previous day's open of 481

First target as per 2nd chart was Rs. 378 and Second target Rs. 342