Pattern Detection


Stockalyze provides facility to detect patterns in price movements. As of Stockalyze version 2014 following patterns can be automatically detected:
  • Zigzag
  • Double top and double bottom
  • Head and shoulders and inverted head and shoulders

Pattern detector can be added to a chart by selecting 'Chart->Add Pattern Detector' menu item.

Menu item to add pattern detector to chart

Menu item to add pattern detector to chart.

Zigzag:

Zigzag pattern is useful in visualizing price movement since it ignores minor fluctuation in price movement and so it makes pattern emerge out of seemingly chaotic movement in stock prices.

Example:

Look at below image showing zigzag pattern (zigzag-2.5%) in price movement of AAPL.

ZigZag pattern detection in price movement of AAPL

ZigZag pattern detection in price movement of AAPL.

Note: Price movement is hidden to make zigzag appear clearer. You can hide price from chart by clicking selected chart style tool button again. Below image shows no chart-style is active and so no price data is shown on chart.

No chart style selected on toolbar

No chart style selected on toolbar.

You can notice that zigzag makes it easy to find patterns in price movement.

Double top and double bottom:

To add double top and double bottom detector to chart you can choose the suitable menu item as described above or click on 'Detect double top and bottom patterns' tool button located on right side of chart:

Double top detection tool

Double top detection tool.

Double Top detection configuration

When you click on tool button or menu item as described above then a configuration dialog will appear:

Double top detection configuration dialog

Double top detection configuration dialog.

You need to provide suitable noise filter and you can also choose colors to be used for detected patterns.

Example:

Below is the chart of SENSEX that shows a double bottom pattern detected on 2 March 2016 and then SENSEX skyrocketed to a new high.

Double bottom pattern detection on SENSEX

Double bottom pattern detection on SENSEX.

Head and shoulders:

To add head and shoulders detector to chart you can choose the suitable menu item as described above or click on 'Detect head and shoulders pattern' tool button located on right side of chart:

Head and shoulders patterns detection tool

Head and shoulders patterns detection tool.

Head and Shoulders detection configuration:

When you click on tool button or menu item as described above then a configuration dialog will appear:

Head and Shoulders detection configuration dialog

Head and Shoulders detection configuration dialog.

You need to provide suitable noise filter and you can also choose colors to be used for detected patterns.

Example:

Below is the image that shows head and shoulders pattern appearing on daily chart of ADBE.

Head and shoulder pattern formation was complete         on 16 March 2016 and then ADBE price moved significantly higher

Head and shoulder pattern formation was complete on 16 March 2016 and then ADBE price moved significantly higher.

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