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What are trading patterns?

 

In technical analysis, patterns commonly refer to the unique patterns that are visible in the fluctuation of a specific stock price.  These unique formations are illustrated by highlighting the stock’s price over a specific time window and help traders spot trends within the price of the stock, as well as price points that might serve as resistance or support.

 

Patterns fall into one of two broad categories:  Continuation or reversal.  Continuation patterns indicate that the trend that traders are following will continue, while reversal patterns indicate that the trend being followed is about to end, or reverse itself.