How To Use Chart Pattern Analysis

Chart patterns can take days, weeks or years to form. One major factor with this is the overall time frame with which you are using to study your charts.

The basics of doing any chart analysis are that we should know that history repeats itself. Every professional chart technician will talk about market cycles and repeated chart patterns.

There are two fundamental types of chart patterns which will be explained in this section:

Reversal Patterns – These indicate a change in trend and can be broken down into Top and Bottom price action.

Double Top – (Topping price action reversal pattern) This stock market chart pattern is considered to be a bearish signal. Understand how we do our chart analysis and trade using this chart pattern.

Double Bottom – (Bottoming price action reversal pattern) This stock market chart pattern is considered to be a bullish signal. Understand how we do our chart analysis and trade using this chart pattern.

Head and Shoulders – (Topping price action reversal pattern) This stock market chart pattern is considered to be a bearish signal. Understand how we do our chart analysis and trade using this chart pattern.

Inverted Head and Shoulders – (Bottoming price action reversal pattern) This stock market chart pattern is considered to be a bullish signal. Understand how we do our chart analysis and trade using this chart pattern.

Rounding Bottom – (Bottoming price action reversal pattern) As the name suggests bottoming this is a bullish signal and the once confirmed price should advance. understand how we do our chart analysis and trade using this chart pattern.

Continuation Patterns – Continuation patterns indicate a pause in trend and that the previous direction of the trend will be resumed after the consolidation.

The reasons for both the continuation patterns and reversal patterns are that the trend, whether it is up or down cannot continue in the direction in which it is travelling forever as there always has to be either a pause in price action or a change in direction. Because of this we end up with a price action that then creates chart patterns in different types of forms. By understanding them and doing the correct technical analysis on them will then subsequently help you to become a successful trader.

Both of these pattern signals have to be traded in totally different ways which will be looked at further through our analysis and video’s.

Ascending Triangle – (Trend continuation pattern) Understand how we do our chart analysis and trade using this chart pattern.

Descending Triangle – (Trend continuation pattern) Understand how we do our chart analysis and trade using this chart pattern.

Flags & Pennants – (Trend continuation pattern) Understand how we do our chart analysis and trade using this chart pattern.

Rectangle Pattern – (Trend continuation pattern) Understand how we do our chart analysis and trade using this chart pattern.

Symmetrical Triangle – (Trend continuation pattern) Understand how we do our chart analysis and trade using this chart pattern.