Logic behind some technical chart patterns

Can anyone explain the logic behind

Acsending wedge pattern
Bullish flag pattern.

And can these patterns work in intraday options trading?

This should answer your question.

But if you want a simple answer, in my view, these patterns should be able to guide you in the direction of the most probable direction of the price movement. Ultimately, risk management is your best friend.


Ascending Wedge- The price makes higher lows, meaning, every time sellers try to bring the price down, buyers come in before previous low is broken, which signals that more folks are interested in buying the stock. Now an ascending wedge can break on either side. If more buying interest is seen and strong volumes come in, then it can break on upside and more buyers come in to take the price higher. But if suddenly huge sell off happens breaking previous low, then new sellers can easily come in and take the price even lower (since PANIC!)

Bullish Flag- In Bullish flag, the faster the price rises the stronger the momentum, after a certain % rise, some folks tend to book profits, that is why there is some pause. The pause can be a range which is straight, slightly on the downside or on upside. Note that in pullback, the volumes are usually less. If volumes on pullback are more, then it might correct. But if it’s less, then when again fresh buyers come in, they can break the range and price starts going higher with inflow of new buyers.

P.S.: Try to understand what buyers and sellers are trying to do and you will understand patterns, don’t take them @ face value and always manage your risk

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Thank you and a small doubt in regarding ascending wedge explaination

As you said the ascending wedge can break out on either side but generally ascending wedge is seen as reversal pattern in a uptrending movement.Can you please tell me more about this in this trend case

Yes it is a bearish pattern if in an uptrend, the candles start to lose momentum, usually small candles start forming and you can also see sometimes the RSI falling.

P.S I explained a general wedge pattern in my reply, but yes, rising wedge is a bearish pattern and in few cases, it may also keep up trending if fresh buying comes in.

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with my little brain all i can understand is, with technical analysis we can react to what happened, but to predict, it has to be aligned with fundamentals for eg. today US market were down due to 7.5% of inflation reports which is why nifty reacted to open gap down from previous day low, it’s all about how they react

what I do is I try to understand the situation by placing myself in their place,

speaking of technicals, they are effective in understanding what is happening in market up to certain extent, wicks & volume is wht i really look for,

closing of a candle is important as well, it’s direct representation of market force

truthfully saying Technical analysis is totally subjective … Technical analysis only show price which represent greed and fear in market … using pattern , indicator , trend line, Fib etc totally depend on your trading plan and strategy how you catch market sentiment by using these due to its subjective nature…( technical analysis of Financial market ) is a good book to read about Technical analysis