the hAnDbook of teChniCAl AnAlysis■ (^) Runaway/Measuring/Midway/Continuation Gaps
■ (^) Exhaustion Gaps
13.4 Chapter sUmmary
As we have seen, chart patterns not only indicate potential bullishness or bearish-
ness in the market, but it also provide practitioners with realistic price objectives
or targets. Chart patterns represent the most fundamental technical indicators of
potential market action and as such it behooves every practitioner to become well
versed in reading their underlying meaning and possible follow‐through action in
the markets.Chapter 13 Review Questions
- Explain the behavioral basis for the existence of chart patterns.
- How do we determine if a chart pattern is a reversal or continuation pattern?
- List as many chart patterns that are intrinsically bullish as you can.
- When does a chart pattern fail?
- What is the difference between a rising wedge with a very shallow angle of
ascent and an ascending triangle? - Describe the measuring objectives for a bullish flag.
- List the preconditions for a more reliable chart pattern reversal.
- Describe the five ways to determine chart pattern completion and list the chart
patterns that are associated with each of those ways.
referenCes
Bulkowski, Thomas N. 2005. Encyclopedia of Chart Patterns. Hoboken, NJ: John Wiley
and Sons.
Edwards, Robert D., and John Magee. 2007. Technical Analysis of Stock Trends. New
York: AMACOM.
Kirkpatrick, Charles, and Julie Dahlquist. 2007. Technical Analysis: The Complete Re-
source for Financial Market Technicians. Upper Saddle River, NJ: Pearson Education.
Murphy, John. 1999. Technical Analysis of the Financial Markets. New York: New York
Institute of Finance (NYIF).
Pring, Martin J. 2002. Technical Analysis Explained: The Successful Investor’s Guide to
Spotting Investment Trends and Turning Points. 4th Ed. New York: McGraw‐Hill.