India, April 3 -- A clever investor is one who can predict the changing tide and take positions in the stock market accordingly. It is here that chart patterns can come handy in giving an investor the big picture and help him/her identify trends of price movements, either continuation or reversal of the existing pattern of stock price movement. The theory behind chart patterns is that history repeats itself and certain patterns consistently reappear and tend to produce the same outcomes. For example, as market sentiment shifts from optimism to fear, a certain pattern may emerge before traders and investors start selling and send the stock price lower.
The two most popular chart patterns are reversals and continuations that can be found acr...