Chart
Pattern
Chart pattern,
once you learnt how to read chart patterns and formations, you will
be able to spot the market trend earlier before it happen. If you
can correctly identified each pattern,you can ride them out and
drain the bank. Chart patterns and formations can be a great help
to us to spot conditions where the market is ready to break out.
Chart
Patterns
Symmetrical
Triangles
Ascending Triangles
Descending Triangles
Double Top
Double Bottom
Head and Shoulders
Reverse Head and Shoulders
Symmetrical
Triangles
Symmetrical triangles are chart formations where joining a line
to two or more highest prices and joining a line to two or more
lowest prices, This two lines converge together to a point where
it form a triangle. ( Shown above ) This formation means neither
the buyers nor the sellers are pushing the price far enough to make
a clear trend. If this was a battle between the buyers and sellers,
then this would be a draw. This activity is called Consolidation.
When these two
lines getting closer to each other, it means a breakout is coming.
Eventually, one side of the market will give in. This is the early
signal of the price direction.
Ascending
Triangles
The left side
of the above picture showing the ascending triangle. This formation
occurs when there is a support level at the lower price. What happens
during this time the buyers manage to push the price exceed the
resistance line. They keep putting pressure on that resistance
level and as a result, a breakout is bound to happen.
Descending
Triangles
The descending
triangle is the exact opposite of ascending triangles. The sellers
won the battle in this case. The price will break out the
support trend line and goes down.
How
these chart patterns works?
In the early stage of symmetrical triangle. No one will know which
direction the price will goes, we just know that the price is about
to break out somewhere. Smart traders will not care where the price
goes, they will place entry orders above the upper line ( lowest
high ) and below the support line ( highest low ). in short we place
entry orders on both sides. Whichever the price goes, we will benefit
from there.
|
