Hope you have gotten a good grip of the candlestick patterns from the prior post. The next technical tool that you need to know is Chart Patterns. As with candlestick patterns, what you need to know are basic patterns that would be relevant to our System, not the umpteen that fill up pages and pages of books and manuals on technical trading. Cutting through the clutter, remember!!
These basic chart patterns are integral to understanding the charting landscape and hence the prevailing market mood. Eventually, the application of this knowledge plays a significant role in trade selection, so important to your overall trading success.
Important Chart Patterns : -
Bullish Pattern | Bearish Pattern | Neutral Pattern |
Reverse Head & Shoulder | Head & Shoulder | |
Double Bottom | Double Top | |
1-2-3 Bottom | 1-2-3 Top | |
W Pattern (a larger variation of Double Bottom) | NA (Reverse of W Pattern is not common) | |
Sideways Consolidation like Flag or Pennant | ||
Sideways Rectangle or Trading Range |
In the subsequent posts, we provide a brief explanation of the above patterns along with a snapshot of the chart formation from Trading View charting software of the 2H or 4H chart. These patterns are valid for any timeframe whether intraday, daily or weekly.
When we talk about setups, we would present number of examples from charts with practical application of the psychology behind these patterns. Please do not bother about understanding technical targets and stop losses for now as that would be very specific to the setups.
Please use the comments section if you need help with any of the patterns. Please click on "Next Post" to move to the first chart pattern - Head & Shoulders or Reverse Head & Shoulders.
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