🤫SECRET Market Signals: Patterns That Guide Profitable Entries and Exits
4 Chart Patterns That'll Level Up Your Trading
Have you ever felt like you're trading blindly in the markets?
As if you're just guessing when to enter or exit a position?
Well, you're not alone! This is a common problem for many beginners.
Let's understand how to read the market's cryptic signals through powerful chart patterns.
These patterns are like street signs, guiding you through the price action chaos.
Master them, and you'll know precisely when to confidently enter and exit trades.
You'll boost your win rate, secure more profits, and achieve that consistent trading edge you've been chasing.
Unfortunately, most traders stay oblivious to these powerful patterns...
...because they think the markets are just random noise.
- They lack a structured way to interpret the price movements
- They get caught up in analysis paralysis and miss the technical clues
- They jump into trades without a trading plan or methodology
- They lack the patience and discipline to let setups develop fully
- They don't take the time to study the intricacies of patterns
Don't worry; you're in the right place.
Over the following few sections, I'll break down 4 battle-tested chart patterns that consistently deliver trade signals.
You'll learn exactly how to spot them and capitalize for maximum profit.
These aren't just textbook examples either - we're going through recent real-life charts so you can apply this immediately.
Head & Shoulders
This reversal pattern marks a dramatic shift from bullish to bearish momentum or vice versa for the inverted head & shoulders.
In a bullish uptrend, the occurrence of this pattern shows buyers losing control as selling pressure builds up.
Identify the 3 peaks - two shorter "shoulders" surrounding a taller "head."
Watch for a break below the "neckline" support connecting the lows.
Enter a trade at the neckline breakout with a target below the head's height.
Pro tip: The pattern is more significant on longer timeframes.
Underlying sentiment: Bears throwing in the towel to aggressive buyers.
Flags and Pennants
These short-term patterns signal a pause and continuation.
It occurs when the price momentarily consolidates before the prevailing trend resumes.
Identify the sharp directional move preceding the consolidation pattern.
Watch for a break of the flag or pennant consolidation pattern.
Enter a trade at the pattern breakout with a target equal to the total length of the pattern.
Pro tip: Pennants are ideal for swing trades and flags for intraday.
Underlying sentiment: A momentary breather that allows traders to re-position for the dominant move.
Double Tops/Bottoms
This pattern consists of two distinct peaks/troughs that signal a reversal of the existing trend.
It often occurs when the market tests a critical support/resistance level before reversing the course.
Note the initial peak/trough followed by another around the same level.
Wait for a price break of the intermediate support/resistance.
Trade in the new direction once confirmation triggers
Pro tip: Wider/longer patterns have more significance.
Underlying sentiment: Buyers and sellers battle at a specific price zone before capitulation.
Ascending/Descending Triangles
These patterns develop as ranges contract before an eventual breakout.
They represent a tightening range as momentum shifts underway.
Identify a series of lower highs and higher lows forming the pattern.
Wait for an upside/downside resolution breaking the trendlines.
Take a trade when the price breaks upwards or downwards in the respective direction.
Pro tip: Volume often diminishes within the pattern before spiking on the breakout.
Underlying sentiment: The calm before the storm as volatility gets compressed.
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There you have it - the 4 most prolific chart patterns decoded step-by-step.
Apply them diligently as part of your trading process for consistent profits.
Don't simply trade randomly anymore. Let the charts show you the way!