Premium Chart Patterns Knowledge

How to Trade Chart Patterns

To trade chart patterns effectively:

A. Identify the Trend First

Reversal patterns work best after strong trends.

Continuation patterns form within established trends.

Trend context increases accuracy.

B. Wait for Confirmation

Never act only on shape.

Confirmation includes:

Breakout from neckline or trendline

Increase in volume

Candle close beyond levels

C. Set Entry Points

Examples:

Breakout above resistance (for bullish patterns)

Breakdown below support (for bearish patterns)

D. Stop Loss Placement

Stops should go:

Below breakout candle (bullish)

Above breakout candle (bearish)

Below/above swing points

Patterns help define natural risk zones.

E. Target Calculation

Most patterns offer measurable targets:

Double top/bottom: Height of pattern projected from breakout

Triangles: Base length projected from breakout

Flags: Length of flagpole added to breakout

This helps set realistic profit expectations.