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. Ascending Tops

    This refers to a series of peaks, each peak higher than the previous ...
  6. Cup and Handle

    A pattern on bar charts resembling a cup with a handle. The cup ...
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. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center