The 4 Reversal Indices Setup Patterns in Indices Trade Explained with Examples
Reversal Setups confirm the reversal of the market trend once this reversal Stock Index Trade chart pattern setup is confirmed.
These reversal Stock Index Trade patterns are formed after extended price trend either upwards or downward & these reversal chart patterns signal that the market trend is about to turn & reverse.
1. Reversal Indices Setup Patterns
- Double Tops Reversal Patterns
- Double Bottom Reversal Chart Setups
- Head & Shoulders Reversal Setup Patterns
- Reverse Head & Shoulders Reversal Patterns
Double Top
Double tops pattern setup is a reversal chart pattern setup which forms after an extended upwards trend. As its name implies, this pattern is made up of 2 consecutive peaks which are roughly equal, with a moderate trough in between.
Summary:
- Double tops setup forms after an extended move upward
- Double tops chart pattern setup shows that there'll be a reversal in market
- We sell when price breaks below the neck-line point: see below for an explanation.
Example of Double Tops Reversal Pattern on a Trade Chart
Double Bottom
Double bottoms pattern setup is a reversal trading pattern setup which forms after an extended downward trend. It is made up of 2 consecutive troughs which are roughly equal, with a moderate peak in between.
Summary:
- Double bottoms chart pattern forms after an extended move downwards
- Double bottom chart pattern setup shows that there'll be a reversal in market
- We buy when the price breaks above the neck-line point: see below for an explanation.
Example of Double Bottoms Reversal Setup on a Trade Chart
Head Shoulders Chart Setup
Head Shoulders chart pattern setup is a reversal trading pattern setup which forms after an extended upwards trend. It is made up of 3 consecutive peaks, the left shoulder, head & the right shoulder with 2 moderate troughs between the shoulders.
Summary:
- Head Shoulders trading pattern setup forms after an extended move upward
- Head Shoulders chart pattern setup shows that there'll be a reversal in market
- Head Shoulders chart pattern formation resembles head with shoulders thus its title.
- To draw the neck-line we use chart point 1 and point 2 just as is displayed and shown below. We also extend the line in both directions.
- We sell when the price breaks below the neck-line point: see the chart below for an explanation.
Example of Head and Shoulders Reversal Setup on a Trade Chart
Reverse Head Shoulders Chart Setup
Reverse Head & Shoulders pattern setup is a reversal head and shoulders pattern setup which forms after an extended Stock Indices Trade downward trend. It looks like an upside down head shoulders.
Summary:
- Reverse Head Shoulders chart pattern forms after an extended move downwards
- Reverse Head Shoulders chart pattern setup shows that there'll be a reversal in market
- Reverse Head Shoulders chart pattern formation resembles is up side down, therefore the name Reverse.
- We buy when price breaks above the neck-line point: see the chart below for an explanation.
Example of Reverse/Inverse Head and Shoulders Reversal Setup on a Trade Chart
Reversal Indices Setup Patterns Lessons Tutorials
Double Tops Patterns & Double Bottoms Setup Patterns
Head and shoulders Chart Setup Patterns & Reverse/Inverse Head & Shoulders Setup Patterns
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