How to Identify New Candlestick Pattern Topping Formations?

Add Volume & Quantity Indicators to Analysis

One of the challenges for Technical Traders is learning the new Topping and Bottoming Formations that have emerged in the past few years. The Topping Formations in the current market can be a surprise for traders. Learning How to Identify New Candlestick Pattern Topping Formations, is by including additional Volume and Quantity Indicators with those you are already using. These can improve your ability to see Dark Pool Quiet Rotation™ and selling pressure, which are not visible on the chart or indicators until after the stock drops sharply.

The chart example below has a new “Flat Top” Topping Formation.

The top actually starts as the Accum/Dist and Money Flow Index MFI Indicators diverge from Price. This reveals Dark Pool Quiet Rotation by giant Buy Side Institutions whose orders are hidden from traders in Dark Pool venues. Price continues up as the Institutions intend. As the buying power of Smaller Funds and uninformed Retail Traders dissipates, the Buy Side Institution giant lot orders selling in Dark Pool Quiet Rotation patterns weakens the Uptrend, shifting it sideways. This at first glance does not look anything like the Topping Formations every Retail Trader knows. It looks like a sideways pattern that is going to break to the upside.

The Money Flow Index MFI and other large lot indicators reveal a negative divergence pattern, warning that this is indeed what is called a “Flat Top.” This is one of the new Candlestick Pattern Topping Formations in today’s market. Selling for profit quickly reverts to Selling Short and the stock collapses, then it quickly rebounds on Buy to Cover orders. However, the stock chart indicators still reflect a sell side pressure.

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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com

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

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