Chart Patterns  |  DEC 2004

The End Of The Trend by Cornelius Luca

Stocks & Commodities V. 22:12 (14-18): The End Of The Trend by Cornelius Luca You’re riding along with the trend, watching your returns consistently increase. You know it’s not going to go on forever… but how do you know when it’ll end? As much as we like trends and their inherent profitability, all good things must eventually come to an end. Dealing with their demise is easier said than done; it’s not only that traders loathe parting with a good thing, but ending trends is often a messy affair that can take its toll on your budget. However, there are several reversal formations you can watch for that may give you a warning that the trend is almost over. The most significant trend reversal patterns are the following: 1. Head & shoulders and inverse head & shoulders 2. Double top and double bottom 3. Triple top and triple bottom 4. V-top Arguably, the second tier of reversal formations are: 1. Rounded top and rounded bottom 2. Rectangle reversal 3. Diamond 4. Upthrust and spring This article will analyze the head & shoulders formation, using currency pairs as examples.

by Cornelius Luca