The Double Top and Double Bottom Patterns are classified as reversal patterns, this means that once the chart pattern has been identified, the most probable outcome, is that when the price breaks out of the pattern it is going to go in the Opposite direction as when it entered the pattern. So, if a chart is heading Up, then it hits some resistance and a Double Top appears, once the price breaks out it is going to start going down. Conversely, If the chart is heading down, and then it hits resistance and forms a Double Bottom pattern it is going to start heading up once it breaks free. For this reason, both of these patterns are great to help you decide when it is a good time to enter a position, or exit one.

Its been a while since my last dividend stock analysis, so I thought I'd start with what should be a heavy hitter, Royal Bank Of Canada (TSE: RY). I have replaced the Dividend Achievers slot, with the DividendInvenstors.ca star rating, due to the dividend achievers list no longer being viewable online. (If you know of a new address for it, please let us know in the comment section! As we all know, all the banks have been hit hard in recent months. Lets see how their overall scores turn out now that things have calmed down a bit.

About the company:

Here is Royal Bank of Canada's description of what they do, which can be found on their website here

The Cup And Handle Chart Pattern (sometimes referred to as "Cup With Handle") is a continuation pattern, which means that it once the pattern has completed and the chart breaks out of it, the price will continue moving in the same direction that it was heading before it hit the resistance that led into the pattern forming. The cup and handle isn't as common as some of the other chart patterns like any of the Triangle Chart Patterns, but what it does have going for it, is when it appears it has an extremely high chance of following through as expected.

All three types of Triangle Chart Patterns are used all the time in technical analysis, this is because they are very common occurrences in charts. When a current trend hits a bit of resistance, there is a good chance a triangle pattern will emerge before it continues on its way. This is because triangles show a tightening of support and resistance, until finally one breaks through. Symmetrical triangles are called that, because they form the shape of a symmetrical triangle. (Did I just point out the obvious?). The ascending and descending triangles will have one straight line and one angled line, to create the triangle shape. The straight line is on the top for ascending triangles, and on the bottom for descending triangles.

The Rectangle Chart Pattern is a continuation pattern, which means once the pattern has appeared and the chart has broken out of it, the price will continue to travel in the same direction it was going before it hit the resistance. The Rectangle chart pattern can form in either a bullish direction or a bearish direction. Unlike most of the other chart patterns, the Rectangle doesn't always see a drop off in trading volume during the support and resistance phase, although, it does generally see a major increase in volume once the price breaks out from within the rectangle pattern. The rectangle pattern consists of Support and Resistance lines running parallel to each other with at least 4 points touching (or coming very close to) either the support line or the resistance line. As you can see in both Figure 1 and Figure 2, the price will be traveling in either a bull or bear direction, and then it will hit some resistance.

Flags and Pennants are considered to be Continuation patterns because after a relatively short period of time where the pattern shows up, the chart will continue to follow in the same direction it was going before it hit resistance. Flags and Pennants are generally grouped together because they both will usually appear after a rapid increase (or decrease) in price. this is movement is referred to as the flag pole. What happens next determines if we have a Flag, Pennant, or neither.

Welcome to the wonderful world of chart patterns! I have a strong belief that any investor that plans on looking at a stocks price chart should have at least a brief understanding of some of the more commonly used chart patterns. It doesn't matter if you are a short term investor or a long term one, chart patterns show up in just about every time frame you can think of. Why is this?