TGT Favorite Chart Patterns

Top Gun Trading – Steve’s Favorites

 

Bullish Zig-Zag (J-Hook)

Spotting the Zig Zag or J-Hook pattern is easy because it looks like the letter “J” laying on its side. This pattern is part of an up-trending move that does a small pullback before resuming the trend. The key is to look for three or four candlesticks that have lower highs because this may be the beginning of the J-Hook …
• Note where Support and Resistance levels are in relation to where the pattern is
• Best if the first up-thrust breaks a Resistance level then retraces
• Note if the retracement is to a new Support level
• Enter on the 2nd move up
• An aggressive entry need not wait for a new breakout


Pop Out of the Box

Sometimes the markets will get stuck in a narrow trading range with well-defined tops and bottoms. The longer this pattern continues the greater the energy of the next move is likely to be … either Up or Down. In the Pop Out of the Box, we are looking for Price to break out above the trading range and have the Momentum oscillator rising. Ideally from below or near the zero line.
• Watch for a break out of the narrow trading range
• The move should be quick and decisive, if not it may not follow through
• The Target is next Resistance level


Bullish Continuation Move

The Bullish Continuation move is where Price is rising but temporarily pauses. In a Renko chart, this will appear as 3 or 4 candles with approximately equal but opposite price movement. Many times, this pattern is just a pause at or near a prior swing level and, with enough energy as indicated by the Momentum and RSqueeze indicators, will power higher. The breakout above this area can be used for a secondary entry with a Stop 2 ticks under the lowest price of the pattern.


Bearish Inverted Zig-Zag (J-hook)

The Inverted or Downward moving Zig Zag pattern is the opposite of the Bullish Zig Zag pattern. Spotting the Zig Zag or J-Hook pattern is easy because it looks like the letter “J” laying on its head. This pattern is part of a downward trending move that does a small bounce before resuming the trend lower. The key is to look for two to four candlesticks that have higher lows because this may be the beginning of the J-Hook …

• Note where Support and Resistance levels are in relation to where the pattern is
• Best if the first downward thrust breaks a Resistance level then retraces
• Note if the retracement is to a newly formed Resistance level
• Enter on the 2nd move down
• An aggressive entry need not wait for a new breakout


Bearish Drop Out of the Box

Sometimes the markets will get stuck in a narrow trading range with well defined tops and bottoms. The longer this pattern continues the greater the energy of the next move is likely to be … either Up or Down. In the Drop Out of the Box, we are looking for price to break down below the trading range and have the Momentum oscillator falling. Ideally from Above or near the zero line.

• Watch for a break down out of the narrow trading range
• The move should be quick and decisive, if not it may not follow through
• The Target is next Support level


Bearish Continuation Move

The Bearish Continuation move is where Price is falling but temporarily pauses. In a Renko chart, this will appear as 3 or 4 candles with approximately equal but opposite price movement. Many times, this pattern is just a pause at or near a prior swing level and, with enough energy as indicated by the Momentum and RSqueeze indicators, will power lower. The breakout below this area can be used for a secondary entry with a Stop 2 ticks above the highest price of the pattern.


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