From sports competitions to state meetings, from the grocery store to the economic table, certain formations represent the rhythm and order of life. The fact that price movements that are shaped within life are also brought together under certain formations and harmonization can help to form an idea about the future of the market. It is perfectly natural for the market to generate a certain response under certain circumstances in the usual process, and to give similar responses when the same conditions are established at a different time. From this assumption, the fact that the overall data constituting the prices are shaped in a certain way sometimes constitutes an extremely valuable vanguard for the investor. The investor who knows the formations and reads on the graphs takes less risk while making the investment decisions about the future.
We will look at the results of a series of candlestick candlestick appearances in this area of our education series. We will consider the shape and results of the communities with the apparently previously defined ancestors based on the screen display.
At a glance, it may be possible to catch clues from many formations when candlestick arrays, which do not say anything at all, are watched again with careful and conscious eyes. To be able to reconcile the formed forms with the formations is usually related to the subjective point of view of the investor and sometimes the different formations can be interpreted by the persons at different points. In order to make comments about the formation formation, it may be enough to analyze the past prices on the graph for a while and to evaluate the results. The ability to perceive formation formations can be achieved through the ability to visualize in a short period of time. It is not necessary to wait for the formation of a developing formation to form an individual appearance similarity. Sometimes it is unreasonable to expect that a shape outline, the lower level or the amplitude that makes up the formation, conforms to the individual definitions. As a general rule, the similarity that occurs as much as the skeleton must be considered sufficient for the definition of formation.
We will try to convey certain formations together with examples of graphics in the graphic.
Binary Dip Formation
Bipolar formation is a reliable form that can be seen frequently. A price that continues to fall is an important return form signaling a dip turn.
As you can see from the example, the price that continues to move in the downward direction returns from an important support point in the first stage. This point may be a previously identified point of support, or it may be the level at which prices are reflected in coincidental or significant economic developments. But in every case it is an important foothold that reflects the will of the investors. If the price returned from here is low after a short recovery period and if it does not continue to move again when it reaches the same level, it will be confirmed that the related level is an important support point. If the price tries to reach a point farther than the previous turn, the bear market is discouraged and fast purchases begin.
The point where the price tries to break twice is the shoulder level, which is a horizontal line drawn from the last point that the diploma tries to rise between the two bottoms. This important line, called the shoulder line, is broken upwards and the dominance of the bulls is felt well and the optimal conditions for getting through are formed. Elevations on the shoulder can often be fast and uninterrupted.
Double Peak Formation
The binary top formation has similar characteristics to the double bottom formation, but the only difference is that it shows symmetrical properties with respect to the binary bottom in a rising graphic.
The price that continues to move upwards reaches a point of resistance at the first stage and returns. If the price returned from here is short after a recovery period and then returns to the same level, it will not be able to resume its movement and will return to the last stage of the double hill formation. After that, if the price drops below the previous point, the double hill formation is completed.
The point that the price tries to break twice and the horizontal line drawn from the last point, which the tries to retreat between the two hills, forms the shoulder line. This important line, called the shoulder line, is broken down and the dominance of the bears is manifested and it is understood that the most favorable conditions for selling are formed. The falls below the shoulder can often be fast and uninterrupted.
In a market that tries to make decisions about the triangle formations, it is usually a clear and reliable form that is formed before important considerations.
As prices have a certain range of motion, this area becomes narrower and after a while there is no amplitude that the price can move. In this case, the price jumps to a specific direction from the point where it is jammed and opens a new flow field to itself. Prices like nature want to move. It is desirable and desirable that the price has a certain movement because it is not possible to earn on a market that is not speculation. For this reason, it is fairly understandable that the demand for closing the stationary period by moving rapidly in one direction after the price is tightened for a while.
The triangles are basically divided into three sections. This formation group, which is grouped as “rising triangle”, “descending triangle” and “symmetrical triangle” in terms of the shape it expresses, is a form of formation that is often seen on the eve of important news.
Rising Triangle Formation
The rising edge of the hypotenuse of the triangular formation has an increasing tendency. For this reason, the rising triangle receives the name. At the top of the price, there is no relative horizontal line in line with a particular resistance point. However, the size of the downward movement is reduced when it is pulled back each time. Therefore, the price is getting tight in an increasingly narrow field.
At the breaking point of the rising triangle formation, the price movement is generally thought to be upward. Therefore, a significant amount of upper bounding line of triangle is regarded as a reporting of the conditions for the passage reception signal. The tendency of the price to move rapidly during exit can sometimes lead to negative short advances. In this case it may be useful to wait for the triangle exit to confirm the upward movement in an acceptable amount.
Lowering Triangle Formation
Having all the features of the rising triangle formation, it works like the lower symmetry of the corresponding formation. The slope of the hypotenuse edge is downward. The price can not go down to the bottom in accordance with a particular point of support. However, each return is shorter each time and the price starts to squeeze in an increasingly narrower range. The price, which can not find the space to move, eventually opens up a new field of action by leaping at the end.
At the breaking point of the descending triangle formation, the price movement is generally thought to be downward. Therefore, the lower limit line of the triangle is the most important indicator of the conditions necessary for the passing signal at a significant amount. The tendency of the price to move rapidly during exit can sometimes lead to negative short advances. In this case it may be useful to wait for the triangular exit to confirm the downward movement in an acceptable amount.
Symmetrical Triangle Formation
Sometimes the market expectation in the triangle formation may be indecisive. While the price is squeezing from both sides, it is not possible to mention neither the downward slope nor the upward slope. The price can go back from a certain point every time, and then back again from a point at the same length. It is therefore not possible to get an idea of the direction of the triangle as it is clearly observed that it is a triangle.
It is obvious that when the price is getting stuck and reaches the end point, it will move in a direction faster than exceeding the point with high acceleration, but it is not possible to determine the direction in this formation given symmetrical triangular name. The best thing to do is to be able to take part in the new price movement, which is moving rapidly after the price direction is fully specified.
In symmetric triangular formation, it is also most beneficial to wait for the price to find its true direction for a while, knowing that short-term reversals may also occur.
Shoulder Head Shoulder Formation
Shoulder-to-shoulder formation is one of the important formations that produces a reliable signal of the return of the rising price trend. This formation, which is translated in Turkish into “head and shoulders” in English, displays a head-like appearance at first sight and a calf-like appearance with two shoulders below the shoulder.
An example of how two shoulder-to-shoulder head shoulder formation will help clarify this. As you can see, the prices first make up the shoulder part by making a hill at a certain level. The price that is withdrawn after a while increases later with a greater momentum, forming a higher hill. The amplitude of this peak, often referred to as the head, can be greater than the amplitude of the part expressed as the shoulder. In the third step, it is seen that the shoulder is almost equal to the height of the shoulder, and another shoulder is formed in the size. The formation of the shoulder head shoulder formation in this way means that the formation takes place.
However, it should be noted that after completing the shoulder head shoulder formation, the support line forming the lower base of the shoulder and head areas should be broken downwards. In order to confirm the formation, the price has to be broken down. A significant downward price is considered a good selling signal for the investor.
Reverse Shoulder Head Shoulder Formation
It is a form that carries all the characteristics of the shoulder head shoulder formation but symmetrically at the bottom of the price graph. The shoulder is the head-shouldered formation that has been rotated in the vertical axis. It occurs in the direction of the downward price and is a reliable return form that expresses the beginning of the upturn.
The downward-moving price basically bottoms at a certain support point. When the returned price gains momentum after a while, when it goes back down again, it creates a bigger bottom on the lower level. The price, which has entered the downward trend after having formed the head part, can only come to the shoulder extension before reaching the point reached by the head part in the last move. The result is a reversed shoulder head shoulder formation.
For confirmation of the formation, the price should absolutely break the shoulder line upwards and be expected to progress in meaningful quantities. The price below the shoulder line indicates that the necessary conditions for purchase have not been established.
Rectify the short name of the area where a stable price in a certain direction confronts the reaction of the opposite direction and enters into the process of lulling up and down in a short band. It is usually the encounter corridor that is observed intensely during the profit realization and the bears with the bulls, the bulls with the bears and clashing for a while.
In the formation of a rectangle, the price suddenly reverses from a certain place. But this movement which is developing in the opposite direction is returned in a short space again. Thus, the price between the two boundaries goes parallel to the axis. This results in the formation of a rectangle in the relevant area.
Rectangles can be seen during both falling and rising trends, and the direction of previous progression at the exit is likely to be preserved. In other words, it is more likely that the rectangle outlet is the same as the previous direction before the price rectangle begins to form.
For a rectangle formed on a rising chart, the upper resistance point is broken up anda purchase is broken down to the lower support point for the rectangle formed in a descending chart, and the risk of issuing sales decreases.
Although the general behavior of the Flag formation is similar to that of the rectangular formation, it is possible to see a short return area in the opposite direction of the price going forward as the intensity of the current flowing in the reverse direction is higher. It is named after the figure because it reminds me of the flag.
Price profit realization in a certain direction may show short-term reversals in the opposite direction to the trend, disclosure of economic data with low precaution or similar reason in any place. This return takes place in the range of the specified price between the parallel two support and resistance limits. However, this return action usually does not have lifespan as in rectangles, and within a short period of time the price continues to move in line with the old trend.
At the exit of the flag, the price probably goes back to moving before the flag starts to form. At the exit of the Flag formation, it is of great importance to wait for the price to fall for a while by breaking the flag, reducing the risk of the position. Downward breakdown of the lower edge of the flag for a falling market is considered to be a suitable condition for the uptake signal of the upper edge of the flag for an emerging market.
Chocks are a formation that expresses the area where prices move in a relatively small amount of amplitude in a given period and are increasingly constricted. Although the formation conditions are relatively similar to the triangles, the process of formation is far more prolonged and both bounding lines are broken without merging on the horizon.
The wedge slope is described as the wedge direction and at the wedge exit price usually tends to break in the same direction. However, this possibility is not as strong a factor as in triangular formations. Therefore, the risk of establishing a more reliable direction than triangular formation may increase. Taking advantage of the wedge formation will take place in the high-acceleration long-running movement that will take place after the wedge boundaries are broken. Therefore, buying on the move that breaks the wedge limit, and selling on the downside will be a good investment strategy. But it will be wise to wait for the price to move away from the wedge in a meaningful amount in order to know whether the break-up motion is a reversed short-term reaction.
Although the wedges are not as frequently seen as other formations, they are an important form and are likely to be seen in economic movements with high reserve.