Bulkowski's Diamond Offshore Trading Quiz

What chart patterns can you find? Look for the following (if you find others, great!): Rising wedge, falling wedge, descending broadening wedge, descending triangle, broadening bottom, right-angled and ascending broadening formation.

Imagine that you own this stock. How do you decide when to sell? That's a tough call when there's no chart patterns to call the top. That may mean the top has not been reached yet, but more likely it means that price has reversed without creating a pattern you recognize

Victor Sperandeo in his book, Trader Vic - Methods of a Wall Street Master describes his trend change method which I call the 1-2-3 trend change. My books Trading Classic Chart Patterns and Getting Started in Chart Patterns, Second Edition discuss the method at length. Here's a brief review.

Draw a trendline from the lowest low to the highest high on the chart such that the line doesn't pass through prices until AFTER it reaches the high. I show this line in red in the above chart.

After all three steps occur, price has changed trend and it's time to sell a long position or consider going short.

Price completed the 1-2-3 trend change and formed a rounding turn. After that, price moved up in a straight-line run and formed higher highs. Price at A reached a high of 26.85 and the low at B was 21.19, a decline of 21%, which qualifies as a trend change (20% is the minimum).