Here are 7 of the top chart patterns used by technical analysts to buy stocks - Business Insider

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Here are 7 of the top chart patterns used by technical analysts to buy stocks

Traders watch the price of X Financial, a Chinese technology personal finance company, following the company's IPO on the floor of the New York Stock Exchange in New York, U.S., September 19, 2018.Technical analysts believe that stock prices often trade in patterns, as the motivating driver behind the movement of stocks is humans, and humans exhibit the same emotions when it comes to their money: fear and greed.

While these patterns can be predictable, they aren't bullet-proof. Head fakes, bull traps, and failed breakdowns occur often and tend to shake traders out of their positions right before the big move. Having a plan before entering a position can help traders weather choppy price movements, increasing their chances of riding an uptrend and avoiding a downtrend.

A double bottom typically takes two to three months to form, and the farther apart the two bottoms, the more likely the pattern will be successful.An ascending triangle is a bullish continuation pattern and one of three triangle patterns used in technical analysis. Bullish flags are short-term patterns that ideally last one to four weeks, typically don't last longer than eight weeks, and usually follow an sharp uptrend.Similar to a bull flag, a bullish pennant is a continuation pattern that consists of a pole and a symmetrical triangle, usually following an uptrend in price.

A bullish engulfing candlestick occurs when the body of one trading session completely engulfs the previous session.

 

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