In the last post we reported bullish chart formations. To end the topic, we present the bearish formations in this post. Bears stand for falling courses. Falling prices tend to be more dynamic than rising ones, as investors are often worried about getting a bad price. In this way, panic sales occur from time to time.
The difference between bullish and bearish formations is that the formations are viewed in reverse. The formations themselves can still be divided in the same way:
- continuation formations
- consolidation formations
- reversal formations
Sun. see bearish continuation formations
bearish continuation formations are simple trends that can be drawn using trend lines. Complementary to this, the analyst can also connect the lows with each other and thus receive the trend channel. The trend lines represent the upward resistance and the lower support.
The chart formation can be traded in different ways. Traders use...
- the support line for a long entry,
- the resistance line as a short entry
- or both for a break-out.
It is often recommended among traders and investors to act in the direction of the trend. Contrary trading is also very popular, but it is very speculative in nature because the likelihood of the trend continuing is either higher or the duration of the trade must be shorter.
This is how bearish consolidation patterns look
Bearish consolidation information can be:
- Bearish sideways flags
- Bearish flags
- Bearish triangles
is a consolidation a consolidation, whether bullish or bearish. The difference is in the prevailing trend. If flags appear within a downward trend, they are bearish flags.
Like bullish flags, bearish flags are often directed against the trend direction, as demand on the seller side either declines or is no longer available. Triangles are also consolidations in which the trading volume gradually decreases.
But as always, the following applies: Chart formations should also not be drawn too precisely. The example below clearly shows that resistance and support lines are only vaguely hit. One should be a little more creative in the analysis and sometimes force patterns.
This makes it clear that such flags, particularly if they are bearish flags, are very suitable for break-out strategies.
This is how bearish reversal formations look.
Reversal formations are also called reversal formations. As with bullish reversals, bearish reversals still occur during the current trend. They come in the following forms:
- Double top
- SKS formation
The double top is the counterpart to the double floor. A double top is more common in the short-term area. It shows a high that was triggered twice, but no higher high could be formed. As can be seen in the chart, the double top does not show a reversal of the overall trend, but only the weakness and a possible correction.
The SKS or shoulder-head-shoulder Formation. But also here applies: It is a formation that looks like a shoulder-head-shoulder pattern. This in turn means that there is not necessarily a single-sided shoulder or just a head. It can also be a double top and several shoulders. It is important to recognize that a top education is imminent. SKS formations are particularly noticeable in the long-term range, as the lower chart makes clear.