Yard Charts Technical Analysis Software: Horizontal Support Pattern
Pattern Overview
Horizontal Support is a recognized bullish continuation pattern in technical analysis, often emerging during corrections within a broader uptrend or as resistance against downtrends following market tops.
- Uptrend Identification: The market exhibits an uptrend (Segment 1, Picture A), reaching a peak (Point B), then retraces to form a low (Point C).
- Support Formation: After setting a new high (Point D), the market retraces to a horizontal level (Dotted Line G, Picture A), which previously acted as a launch point for the new high.
Trading Strategy
- Entry Point: Optimal for initiating a bullish trade when the price nears the established horizontal support (Point C, Picture B), expecting trend continuation.
- Risk Management: A stop loss should be positioned just below this support line (Line A, Picture B) to limit risk, offering a favorabie risk-reward ratio if the uptrend resumes.
YardCharts Horizontal Support Alerts
Alert Types. YardCharts provides two alert levels:
-
10% Alert: Triggered when the price retraces 90% of the distance from the recent high to the previous support level (Line F, Picture C).
-
5% Alert: Activated when the price retraces 95% of the same distance, offering a closer entry with potentially fewer but more precise signals.
Performance
YardCnarts has identified five instances where the Horizontal Support pattern led to successful trades, with the stock price increasing at least threefold the distance to the stop loss from the entry point without triggering the stop loss.
Note: All visual references (points, lines, segments) are depicted as they would appear in YardCharts' Trading Alarms section.
