Pattern

AAA

DEFINITION of 'Pattern'

In technical analysis, the distinctive formation created by the movement of security prices on a chart. It is identified by a line connecting common price points (closing prices, highs, lows) over a period of time. Chartists try to identify patterns to try to anticipate the future price direction.
Also known as "trading pattern".

INVESTOPEDIA EXPLAINS 'Pattern'

Patterns in security prices occur daily. However, although the various kinds of price patterns may in hindsight be easy to understand and see on paper, it is much harder to spot, and trade these formations in real time. There are many different kinds of patterns in technical analysis: the cup and handle, ascending/descending channels and, among others, the head-and-shoulders pattern.

RELATED TERMS
  1. Rectangles

    A technical trading pattern in which a security's value ranges ...
  2. Volatility Ratio

    A technical indicator used to identify price ranges and breakouts. ...
  3. Tweezer

    A pattern found in technical analysis of options trading. Tweezer ...
  4. Price Action

    The movement of a security's price. Price action is encompassed ...
  5. Confirmation On A Chart

    An indicator or chart pattern that provides evidence that the ...
  6. Ascending Tops

    This refers to a series of peaks, each peak higher than the previous ...
Related Articles
  1. Continuation Patterns: An Introduction
    Charts & Patterns

    Continuation Patterns: An Introduction

  2. Introduction To Technical Analysis Price ...
    Trading Strategies

    Introduction To Technical Analysis Price ...

  3. Jesse Livermore: Lessons From A Legendary ...
    Trading Strategies

    Jesse Livermore: Lessons From A Legendary ...

  4. Exploring Oscillators and Indicators
    Insurance

    Exploring Oscillators and Indicators

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center