Quick Heal - Perfect example of Three Falling Peaks Pattern.

2017년 10월 31일

Three Falling Peak Pattern

1. This pattern is a pattern that signals change in current trend and start of new trend.
2. This pattern is explained by Thomas Bulkowski in his book " Encyclopedia of Chart Patterns "
3. This pattern is used to avoid creating long positions in stock that may enter in bear markets.

Rules of this Pattern

1. There should be a uptrend preceding this pattern.
2. Formation of similar/identical Three (3 ) peaks , each lower than the last.
3. Pattern gets confirmed , when prices closes below the lowest valley.
4. Stop is to placed at the last peak
5. Target of this pattern is derived by deducting 33% of the difference between First peak and the lowest valley, from the lowest valley price.
6. If the Bear trend extends further,second target can be find by deducting the entire height of highest peak between lowest valley,from the lowest valley.

Here in this Quick Heal Chart , three peaks pattern formation can be clearly seen, i have marked the three peaks as 1 -2-3 (
The peaks are thick and look identical, i have placed a horizontal line at the lowest valley( 232.2 ).
The stock opens gap down , broke the lowest valley support( 232.2) , hence confirming the trend change in the stock signaling start of a bear trend.

First target for this stock was: { 232.2 - 33% of [ 259.7 -232.2] } = 211
Second Target { 232.2 - [259.7-232.2] } = 169

Well this pattern cannot be used as a system to exit long position , as it takes long to get confirmed, where more of your profit would be eaten away, if you wait for this pattern to get confirmed, however this pattern can help you avoid creating long positions in stocks which has entered in a bear market and saves you from making losses, and aggressive traders can also creates short positions with the help of this pattern.