Pattern Detection


Stockalyze provides facility to detect patterns in price movements. As of Stockalyze version 2014 following patterns can be automatically detected:
  • Zigzag
  • Double top and double bottom
  • Head and shoulders and inverted head and shoulders

Pattern detector can be added to a chart by selecting 'Chart->Add Pattern Detector' menu item.

Menu item to add pattern detector to chart

Menu items to add pattern detector to chart.

Zigzag:

Zigzag pattern is useful in visualizing price movement since it ignores minor fluctuation in price movement and so it makes pattern emerge out of seemingly chaotic movement in stock prices.

Example:

Look at below image showing zigzag pattern (zigzag-3.0%) in price movement of Yahoo.

Note: Price movement is hidden to make zigzag appear clearer.

You can hide price from chart by clicking selected chart style tool button Chart Style Toolbar, to show price again click again on desired chart style.

You can notice that zigzag makes it easy to find patterns in price movement.

Zigzag pattern in yahoo

Zigzag pattern detection with Yahoo(NASDAQ:YHOO).

Double top and double bottom:

To add double top and double bottom detector to chart you can choose the suitable menu item as described above or click on 'Detect double top and bottom patterns' tool button located on right side of chart:

Detect double top and bottom patterns

Detect double top and bottom patterns

Double Top detection configuration

When you click on tool button or menu item as described above then a configuration dialog will appear:

Double top and double bottom configuration dialog

Double top and double bottom configuration dialog

You need to provide suitable noise filter and you can also choose colors to be used for detected patterns.

Example:

Below is the chart of Autodesk (NASDAQ:ADSK) that shows a double bottom pattern detected during November 2012 and then the price of ADSK sky rocketed.

Double bottom detected on ADSK chart

Double bottom detected on ADSK chart

Head and shoulders:

To add head and shoulders detector to chart you can choose the suitable menu item as described above or click on 'Detect head and shoulders pattern' tool button located on right side of chart:

Detect head and shoulders patterns

Detect head and shoulders patterns

Head and Shoulders detection configuration:

When you click on tool button or menu item as described above then a configuration dialog will appear:

Head and Shoulders detection configuration dialog

Head and Shoulders detection configuration dialog

You need to provide suitable noise filter and you can also choose colors to be used for detected patterns.

Example:

Below is the image that shows head and shoulders pattern appearing on daily chart of Microsoft (NASDAQ:MSFT). Notice how badly price crashed after pattern was confirmed in mid may 2008.

Head and Shoulders pattern detected on daily chart of MSFT

Head and Shoulers detected on daily chart of MSFT.