Chart Pattern Analysis
figUre 13.22 An Island Top Formation on the Daily Chart of Direxion Daily Gold
Miners Bear 3X Shares.
Courtesy of Stockcharts.comand any other price overlays such as trendlines, channels, moving averages,
Ichimoku clouds, and so on.Notice that in Figure 13.21, the island top forms at the previous resistance
level, making it potentially more reliable as a reversal pattern.
In Figure 13.22, we observe a completed island top formation occurring on
low volume during an overbought condition on the daily stochastics oscillator.symmetrical, ascending, and Descending triangles
There are basically four types of triangle formations:- Ascending (characterized by converging trendlines)
- Descending (characterized by converging trendlines)
- Expanding (characterized by diverging trendlines)
- Symmetrical (characterized by converging trendlines)
Symmetrical triangles are neutral formations. They are characterized by
successively lower peaks and higher troughs. There are generally regarded
as reversal formations if they are located at cycle extremes or at previous
significant resistance or support levels. At or near cycle midpoints, they are