Chart formations


Peak Formations

Peak formations are chart formations that occur at the peak high or low of a chart. These peak formations offer a very high probability that the trend will reverse or have some sort of pull back. Below I will list all of the peak formations to look for, I will describe them, and I will attach a video showing examples of each of them on live charts.


M & W Formation

An M formation will appear at a peak high, and a W formation will be issued at a peak low. Both of them are frequently identified patterns and are good reversal patterns. A RRT (railroad track) is also a good reversal pattern as it is an M or W which has occurred more quickly. 

There is usually a time gap of 30-90 mins between the two peaks of the M or W, but they can occasionally take longer. The fastest of the three would be RRT is one 15 minute candle up and one down right after or vice versa. More Extended periods also occur and are used to gradually accumulate more positions by traders who are enticed into taking trades in the direction of the technical trend.


Trapping Volume

At a peak formation low or high, you will get several spikes which are contained by a trend line. In this situation, each subsequent spike is not lower or higher than the previous. In turn, traders enter positions on every spike and the market never lets trades from the last spike get out in profit or breakeven. In a peak low, you will have spikes follow it which continue to close higher than the last and the opposite for a peak high.


The Wedge

Just as they do in trapping volume, in a wedge, they do the same except they squeeze the price to a point and whichever way it breaks is the way it will end up going. You will observe that on the lower trendline of the wedge, the peaks become slightly higher each time it comes down, and the opposite would happen at the upper trend line in the wedge. There is no way of predicting the exact way price will ultimately break out so in this situation the best thing to do is to wait for the breakout.


Maintaining the Valid High or Low

As long as the price stays above the low after you have entered the trade or below the high after your entry then the entry and trade would remain valid. Sometimes caution needs to be taken because if price exceeds the high or low but closes back inside the high or low, they simply did it to trigger peoples stop losses and entice more trades first.


The Half Batman

The half Batman can also be looked at as the half M or W. It essentially is an M or W formation that didn't make the second move (or leg) and collapsed or spiked after the half Batman was created. The second swipe did not occur when there were enough traders trapped in in the first move and don't want to give them an opportunity to escape. 

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