M and W Patterns

"M" and "W" patterns are usually considered as M-Top and W-Bottom patterns with few differences. M and W Patterns usually continue the prior trends where as M-Top and W-Bottom patterns terminate the trends. Frequently, "M" and "W" patterns form during the congestion zones. "M" patterns rarely form at the "market bottoms" and "W" patterns rarely form at the "market tops." The volume concept of timing is very similar to their counter parts "Double tops" and "Double bottoms." These patterns are also closely related to "Triple tops" and "Triple bottoms," and "Head and Shoulders" or "Inverse Head and Shoulder" patterns.

Trade:

Trades are initiated at the breakdown of the neckline/hump level. For W-Bottoms, trades are initiated at the breakout of the neckline/hump level. Enter a "long" trade above the high of the breakout bar at neckline level, and for M-Tops enter a "short" trade below the low of the breakdown bar at neckline level.

Targets:

In both patterns, the targets are set at the pattern high for W-Pattern and pattern low for M-Pattern.

Stop:

For M-pattern, the trade is protected with a stop loss above the pattern high. For W-Pattern, the trade is protected with a stop loss below the pattern low.

W-Pattern

Neckline
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