Chart PatternsChart patterns are formed by up and down price movements, which tend to form recognizable recurring designs or figurative diagrams. Stock trading pattern is shifting from buy and hold to pattern trading, which statistically gives us more opportunities to have consistent profitable trades.
Pattern formations are resting areas, where majority of traders' mind is thinking, to decide whether to buy more or sell more. This big mind's oscillations results in the formation of patterns in a chart. These may be continuation patterns or reversal patterns. In a trending market, the stock prices loses their momentum due to profit booking. They rests for a while and make some up and down movements, before they continue their journey, in the direction of the original trend. These patterns are termed Continuation Patterns. Or they may be Reversal Patterns. The trend, when exhausted, slows down, forms a pattern before they change their direction. So these patterns alerts us as to the direction of the market. They provide us early signal either to book profit or make a new entry. Trading patterns demands a thorough understanding of not only the chart formations, but also the principles of bull market, bear market, market trends, trend lines, support and resistance. Is it like seeing stars to look at the charts? Don't worry. Study the charts by clicking the links below.
To make a trading decision, study of patterns should be combined with the study of volume and indicators. Click here to go from Chart Patterns to Candlestick Patterns. Click here to go back to Stock Trading Infocentre Home page. | Privacy Policy | Disclaimer | Contact Me | Site Map | |
Your Compliments are here |
Stock Trading Infocentre Book Store |
There are old traders |
You don't have to be |
