Technical Analysis Signal patterns

Chartists analyze price chart and try to find patterns that give them signals to buy or sell securities. The patterns are much more used for trading purposes then long term investment. The most known patterns are:

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Rectangle: Up trend (Bullish)

Rectangle is usually interpreted as continuation pattern. Same highs and lows are tested several times. If, in an uptrend, the price line goes out by crossing the top side of the rectangle, it's interpreted as a purchase signal.

Rectangle: Down trend (Bearish)

If, in an downtrend, the price line goes out by crossing the bottom side of the rectangle, it's interpreted as a sale signal.

Head and Shoulders: Downtrend (Bearish)

The head and shoulders pattern is often interpreted as a reversal pattern. The red line represents the neck, the blue points show the shoulders and the green the head. In an uptrend environment, this pattern signal the end of the uptrend period and is interpreted as a sale signal.

Head and Shoulders: Uptrend (Bullish)

In an downtrend environment, this pattern signal the end of the downtrend period and is interpreted as a purchase signal.