Interpreting Stock Sideways Patterns

Tips to Identify Sideways Patterns & List of How They are Different

Most traders do well during Uptrending Markets when there is either Moderately Trending action, Momentum Runs, or Velocity Runs. However the preponderance of traders struggle during Sideways Trends.

This is true whether the trader is trading Stocks, Exchange Traded Funds, E-minis, or Options. There are hundreds of strategies that have been developed for sideways action, but still Technical and Retail Traders have meager gains or chronic losses during Sideways Market Conditions.

This is an important trend to master as the markets now trend sideways more than 60% of the time, often in patterns that are not recognized as sideways.

Here are some Tips to Identify Sideways Patterns:

1. Bottoming Formations are predominantly sideways.
2. Topping Formations are also mostly sideways.
3. Platform Market Conditions are lengthy sideways action in a tight formation, that whipsaws Swing and Day Traders out of potentially good entries.
4. Consolidations are common when Professional Traders are actively trading.
5. Compression Patterns are frequently overlooked by traders.
6. Trading Ranges are also sideways, but are often mistaken for Momentum Runs.

Here is a List of how Sideways Patterns are Different:

1. Amplitude of Oscillation. All sideways action is a form of Oscillation.
2. Magnitude of individual candlestick size.
3. Dimension of the typical time duration of the sideways pattern, based on magnitude and amplitude.

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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a FreeStockCharts chart, courtesy of Worden Bros. and FreeStockCharts.com

Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses

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