Price Chart Primer

Understanding the well-known price patterns presented in this primer will help you make profitable buy and sell decisions.

Upside Price Pattern

A prolonged upside makes it easy for investors to make money because prices are consistently rising. Buy stocks on the price upside. More...

Downside Price Pattern

Prices on the downside are bad bets for investors. Do not buy a stock when its price is declining. More...

Cyclical Price Pattern

For some stocks the upside and downside cyclical pattern repeats again and again for many years. In the Kulicke & Soffa (KLIC) price chart it's easy to see that each of the five cycles from June 1, 1992 to June 17, 2005 has an upside, peak and downside. Notice that the heights of the peak and duration of the upsides and downside vary from cycle to cycle. But in general the cycles have the same overall form of the upside, peak and downside. More...

Bubble Top

Investors frequently bid up the price of a stock to unsustainable levels. Prices make new highs day and day, week after week and month after month. It seems prices will go up forever and the sky is the limit. People justify paying very high prices by saying "It's different this time" so they keeping paying more and more for the stock causing a price bubble to form. Eventually the buying binge ends and the price bubble bursts sending prices to the downside. More...

Double Top

A double top is a frequently observed topping formation that occurs when a top is followed by a short-term downside and then a short-term upside that culminates with a second top. The second top is approximately the same value as the first top and is usually followed by a significant long-term downside. More...

Head and Shoulders Top

The head and shoulders price pattern has three tops called the left shoulder, head and right shoulder. The neckline is the support level at the completion of the downside of each top. Prices break below the neckline for the right shoulder. More...

Double Bottom

A double bottom has seven elements: initial downside, first bottom, upside, top, downside, second bottom and final upside. The low of a downside forms the first bottom. Then prices rise to form a top and then fall to form a second bottom. Finally, a second upside occurs to complete the pattern. A double bottom is a bullish pattern. Some double bottoms look like the letter W. More...

Price Collapse

One of the worst nightmares an investor can experience is the sudden collapse of a stock price. Usually the collapse is caused by unexpected bad news such as poorer than expected earnings, a downward revision of previously stated earnings, accounting errors or fraud, product recall, or indictments of key executives. More...

Related Articles:

Introduction to Price Patterns
Understanding Price Patterns
Price Pattern Gallery
Cyclical Price Patterns
Long-term Price Charts

Updated January 25, 2008.