Chart Patterns

Q1 (10)

(a) Height of pattern $=$ head $-$ neckline = 148 - 120 = \28$. Target$=$neckline$-$height$= 120 - 28 = $116. **(target = \116)** Why: The measured move assumes the momentum that drove price from neckline to head reverses symmetrically once the neckline breaks; the vertical distance is projected downward from the break point. (2 for method + why, 2 for correct number)

(b) Does not invalidate. Shoulders need only be roughly symmetric in height and time; a \2$difference ($132$vs$130$) is minor and typical of real patterns. The defining feature is the higher head flanked by two lower peaks. (2)

(c) Reward = 120 - 116 = \4$. Risk$= 131 - 120 = $11$. Reward-to-risk$= 4/11 \approx 0.36$(i.e.$\approx 0.36:1$). (2 for reward+risk, 2 for ratio). Note: unfavourable — a valid teaching point.

Q2 (12)

(a) (1 each)

• Head & shoulders — reversal (after uptrend)
• Ascending triangle — continuation (typically in uptrend, bullish bias)
• Bull flag — continuation (uptrend)
• Double bottom — reversal (after downtrend)
• Rising wedge — reversal (bearish; can end an uptrend) / continuation-bearish in downtrend — accept reversal after uptrend
• Cup and handle — continuation (uptrend, bullish)

(b) In a rising wedge both boundary lines slope up, but the lower line rises faster than the upper — price advances are getting weaker and the range narrows. Rising prices on declining volume show buyers losing conviction; the contraction resolves downward as demand exhausts. (4: 2 for boundary-line geometry, 2 for volume/momentum logic)

(c) A breakout/breakdown confirmed on rising (or expanding) volume through the pattern's key level (neckline/boundary). (2)

Q3 (10)

(a) Height = 58 - 50 = \8$. Target$=$breakout$+$height$= 58 + 8 = $66. *Why:* the depth of the base is projected upward from the confirmation (neckline) break. **(target = \66)** (3)

(b) Example solution:

def measured_move(trough, neckline, direction):
    height = abs(neckline - trough)
    if direction == "bottom":   # double bottom -> up
        return neckline + height
    elif direction == "top":    # double top -> down
        return neckline - height
    else:
        raise ValueError("direction must be 'top' or 'bottom'")

(2 for height, 2 for correct sign logic per direction, 1 for validation/structure)

(c) Double top: height = 90 - 78 = \12$; target$= 78 - 12 = $66. **(target = \66)** (2)

Q4 (10)

(a) (2 each)

• Ascending: flat/horizontal resistance on top, rising support (higher lows) below → bullish, breaks up.
• Descending: flat/horizontal support on bottom, falling resistance (lower highs) above → bearish, breaks down.
• Symmetrical: downward-sloping resistance and upward-sloping support converging → neutral; breakout direction determines bias.

(b) Base height = \14$, upward breakout at$$65$. Target$= 65 + 14 = $79. *Why:* the base (widest part) is projected in the breakout direction from the breakout point. **(target = \79)** (2 method+why, 2 number)

Q5 (10)

(a) A bull flag is a short rectangular/parallel-channel consolidation sloping slightly against the prior sharp move (the flagpole). A pennant is a small symmetrical-triangle consolidation (converging lines) after the flagpole. Both are continuation because they represent a brief pause/profit-taking within a strong trend before it resumes in the same direction. (2 flag vs pennant shape, 2 continuation reasoning w/ flagpole)

(b) Flagpole height = 52 - 40 = \12$. Target$=$breakout$+$pole$= 50 + 12 = $62. **(target = \62)** (1 pole, 2 projection)

(c) Similarity: both are consolidation/pauses that often resolve in the trend direction (bullish) — a falling wedge in an uptrend/downtrend is a bullish reversal/continuation. Key difference: a bull flag's boundaries are (roughly) parallel, whereas a falling wedge's boundaries converge (both slope down but tighten). (1.5 similarity, 1.5 difference)

Q6 (8)

(a) Cup and handle: a rounded "U" bottom (the cup) followed by a smaller downward drift/consolidation (the handle) near the rim; bullish continuation. Target = cup depth projected up from the breakout (rim). Depth = 75 - 60 = \15$; target$= 75 + 15 = $90. **(target = \90)** (2 description, 2 number)

(b) A rounding bottom develops over a long timeframe as sentiment slowly shifts from bearish → neutral → bullish, giving a gradual curved base; a V-reversal is a sharp, panic-driven reversal in one move. Volume forms a bowl: high during the initial decline, drying up at the base (apathy/low participation) and rising again as buyers return on the right side — mirroring the price curve. (2 timeframe/psychology, 2 volume bowl logic)

[
  {"claim":"H&S target = neckline - height = 116", "code":"head=148; neck=120; height=head-neck; result=(neck-height==116)"},
  {"claim":"H&S reward:risk = 4/11", "code":"reward=120-116; risk=131-120; result=(Rational(reward,risk)==Rational(4,11))"},
  {"claim":"Double bottom target = 66", "code":"neck=58; trough=50; height=neck-trough; result=(neck+height==66)"},
  {"claim":"Double top (90/78) target = 66", "code":"neck=78; peak=90; height=peak-neck; result=(neck-height==66)"},
  {"claim":"Symmetrical triangle target = 79", "code":"base=14; bo=65; result=(bo+base==79)"},
  {"claim":"Bull flag target = 62", "code":"pole=52-40; bo=50; result=(bo+pole==62)"},
  {"claim":"Cup and handle target = 90", "code":"rim=75; bottom=60; depth=rim-bottom; result=(rim+depth==90)"}
]