Day And Swing Traders

Day and swing trade like a pro.

Chart Patterns Theory

 

 

1/ A chart pattern is either bullish or bearish.

2/ Bullish chart patterns often emerge on or near a support level, at the end

of bearish trend or cycle and during a bullish trend.

3/ Bearish chart patterns regularly materialize on or near a resistance level, at

the end of a bullish trend or cycle and during a bearish trend.

4/ All chart patterns are distinctive, recognizable price structures.

5/ A chart pattern may develop into a fractal pattern if it duplicates itself on

various periods.

6/ Every chart pattern has its exclusive price target.

7/ A bullish chart pattern during an uptrend is frequently a bullish continuation

pattern on that time frame.

 

Image = "Bullish continuation flag pattern"

8/ A bearish chart pattern during a downtrend is usually a bearish continuation

pattern on that period.

9/ The start of chart a pattern formation does not always guarantee its completion.

10/ A chart pattern is not a trend except the ABCD chart pattern.

11/ A bullish chart often precedes a bullish price-action.

12/ A bearish chart pattern often precedes a bearish impulsive wave or trend.

13/ Each chart pattern has its particular components.

14/ Patterns that take long to form are normally or theoretical more reliable than

those that take lesser time.

15/ When the same pattern appears side by side in the same time frame, the first

pattern confirms the second.

16/ A bullish chart pattern can correct a bullish price-action.

17/ A bearish chart pattern can correct a bearish price-action.

18/ A pattern on a lower period can allow traders to forecast the next price move

as the same pattern is expanding on a higher time frame.

19/ A chart pattern that is in a higher time frame may duplicate itself

on various lower time frames.

20/ Most corrective or contra-trend patterns have three core components.

21/ Most cyclical patterns have two principal components or eight main sub-components.

22/ Complex patterns are combinations of two or more different patterns.

23/ For day or swing and position trading purposes, a chart pattern is primarily a trading

setup that will generate trading signals on the lower periods.

24/ A bearish chart pattern with deteriorating fundamentals (or bearish sentiment) is bearish.

On the other hand, a bullish chart pattern that is the result of robust financials is intrinsically bullish.

 

 

 

 

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