Powerful Technical Patterns That Exhibit Strength

Powerful Technical Patterns That Exhibit Strength

Technical Patterns on a stock chart can help identify areas of strength.

These areas on a chart will allow you to enter a stock with positive price action, confirm you timed the move correctly, and ensure a failing trade will result in minimal loss.

When a trade is placed, you should feel confident that the price is moving in your favor.

Patterns Repeat

A pattern is simply a repetition of characteristics.

In every market, we can observe specific patterns that repeat over and over—the basic laws of supply and demand repeat on all stock charts.

Technical analysis is the study of price movement over time. When looking at a stock chart, traders closely monitor how price behaves.

You've most likely studied large basing patterns like the cup and handle and head and shoulders, while candlesticks provide clues on the price's direction when we see engulfing days, hammers, or dojis.

While a base develops and when a large move begins, subtle clues within a base help traders recognize strong price action, which signifies accumulation.

Green Line Breakout

A Green Line Breakout (GLB) is a traditional horizontal resistance area broken when a stock makes a new all-time high.

  • The daily and weekly closing price should be at a new all-time high.
  • The breakout into new highs should be supported with high volume.

The buy signal occurs when a stock closes at a new all-time high (over a green line drawn from the previous high). This traditional pattern is more prevalent in position trading and is best viewed on a weekly chart.

Symbol: ELF
e.l.f. Beauty
Year: 2022

Powerful Technical Patterns That Exhibit Strength

In the spring of 2022, ELF bottomed and began forming a first-stage base that would see a 300% move in one year! An earnings beat gapped the stock up and closed near highs on a daily chart. If you bought the gap day at the close and placed a stop at the low of the day, your initial risk would be about four percent.

Symbol: MU
Micron Technology
Year: 2024

Powerful Technical Patterns That Exhibit Strength

During the Dotcom boom in 1999-2000, MU made a high that wasn't retested until March of 2021 and January 2022. In March 2024, MU broke out to all-time highs and advanced 30% in four weeks.

Symbol: NVDA
Year: 2016

Powerful Technical Patterns That Exhibit Strength

After the housing crisis brought most of the market down in 2008, NVDA needed nine years to reach its all-time high. Once NVDA broke out to new highs in 2016, it moved an historic 600% in two and a half years, and we are now witnessing one of the greatest stocks in our generation.

Pocket Pivot

A Pocket Pivot is a strong day with supportive volume displaying a huge demand for the stock.

  • The price action should include a substantial price gain with a high daily closing range.
  • The key distinguishing factor of the pocket pivot is the strong volume.
  • The volume of that day should be higher than the volume on the previous 10 down days.

The buy signal is a strong close, with increased volume confirming the strength. You can wait until near the end of the day or anticipate the close in a strong market as volume pours in.

Deepvue's Enhanced Volume Indicator is placed at the bottom of the chart and represented with a green volume bar to visualize Pocket Pivots. Note that the pocket pivots at the bottom of the base imply support and additional follow-up pocket pivots signify accumulation.

Symbol: COIN
Year: 2023

Powerful Technical Patterns That Exhibit Strength

In the fall of 2023, Coin made a 90% move in six weeks from the first pocket pivot up the right side. If purchased correctly, you could have seen a 50% move in three weeks! The initial risk with a stop at the low of the day would be less than five percent.

Symbol: CAVA
CAVA Group
Year: 2023-2024

Powerful Technical Patterns That Exhibit Strength

During its Institutional Due Diligence Phase, CAVA printed many Pocket Pivots while forming a bottom and building the right side of its first base. Seeing a Pocket Pivot off the bottom should make you keep a close eye on a stock to see how it acts as it builds out. Get aggressive when you see more Pocket Pivots as a stock breaks out of a standard pivot.

Symbol: CELH
Celsius Holdings
Year: 2023

Powerful Technical Patterns That Exhibit Strength

Buying the May 2023 gap on CELH might have rewarded you with a 60% move, but acting on the Pocket Pivots off the lows in April could have helped you manage risk tighter and would have gifted you with a 135% move in five months. Followup Pocket Pivots after a breakout will help you keep your conviction that there is still a large demand for the stock.

Oops Reversal

An Oops Reversal is a bottoming signal when the price is supported by a new low.

  • Price gaps down below the low of the previous day and creates a new low
  • Buyers step in and push the price up into the range of the previous day
  • Price closes above the close of the previous day

The buy signal is the close above the previous close. After a gap down, you can set an alert for when the price comes back into the previous candle's low in anticipation of a strong close.

Symbol: CRWD
CrowdStrike Holdings
Year: 2023

Powerful Technical Patterns That Exhibit Strength

In the summer of 2023, CRWD printed two oops reversals at the bottom of its base. Looking at August 18, you will also find that the market indices made new lows and closed poorly, making CRWD stand out relative to the market as it made higher lows.

In September, CRWD printed another subtle oops reversal at a new higher low while the market printed a lower low. Increased volume is helpful in confirming your thesis, but the price action is not invalidated on lower volume. If you purchased CRWD in the fall of 2023, when the market strengthened, you would be holding one of the strongest leading stocks!

Symbol: APP
Year: 2022-2023

Powerful Technical Patterns That Exhibit Strength

Near the end of the 2022 bear market APP made a new low with an Oops Reversal that resulted in a 90% move off the bottom. When APP formed its first base, again it saw an Oops Reversal at the low of the base. Buying the lows like this is risky but there is a clear bottom when observed to manage risk against. When you see an Oops Reversal off the lows look for follow-through strength and a new potential pivot to form.

Symbol: GPS
The Gap
Year: 2024

Powerful Technical Patterns That Exhibit Strength

After gapping on earnings in November 2023, GPS formed a tight sideways base with clear support. An Oops Reversal marked the low, then another marked a higher low. Building a position may take some time, but accumulating shares here would get you in a clean 50% move.

Watch for Oops Reversals when you see bottoming action and tight ranges begin to form. These lows can be used to build a position against while providing a clear line in the sand to stop the position.

Using Deepvue's Screener for Technical Indicators

When you create a new screen in Deepvue, you can type “Technical Pattern” into the search box to display all the scannable criteria.

Powerful Technical Patterns That Exhibit Strength

When you select the criteria you are looking for, click “Yes.” It will be added to the selected group in your applied filters and displayed on your screen.

Powerful Technical Patterns That Exhibit Strength

If you are unsure of what the pattern means, you can place your cursor over the Technical Patterns heading, and you will see a brief description of the pattern. Here is the description for the Bullish Reversal Bar.

Powerful Technical Patterns That Exhibit Strength

Technical Patterns On Your Charts

Use the Technical Patterns Indicator to place a signal of your favorite pattern on your charts.

Powerful Technical Patterns That Exhibit Strength

Select which indicator you want to see on your charts in the settings. You can also change its color, icon style, and location.

Powerful Technical Patterns That Exhibit Strength

Let's look at CELH forming a base with Oops Reversals labeled as green arrows under the candles.

Powerful Technical Patterns That Exhibit Strength

Recognizing subtle price movements within a base can help you keep an eye on the strongest stocks.

Entering a stock on this action off the lows will get you in early on a new uptrend.

Deepvue Offers Many Technical Patterns

Make the most of your trading style. If you know a particular setup works well, you should screen for that pattern daily.

You can screen for technical patterns to help you find patterns like:

  • Inside Days
  • Bullish Reversals
  • Tight Weekly Closes
  • Launch Pad Setup
  • Three Bar Break
  • Ants
  • In The Wick
  • Other Simple Candlestick Patterns

Key Takeaways

When analyzing price movement, look for patterns that identify strong accumulation.

There are always repeatable patterns that can be capitalized upon for any trading style.

Make the most of your personal style by using Deepvue's Technical Pattern filters.

Screen for your favorite technical pattern and place the indicator on your charts to see the signal easily.

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