Chart-Formations.com

Wealth Warning

Trading equities, options, derivatives, currencies and cryptocurrencies, commodities or any other financial security can offer significant returns BUT it can also result in significant losses if the market moves against your position. It requires a strong commitment to skill development, knowledge acquisition, and emotional control. It should be treated as a business with a clear business plan, proper risk analysis, and a defined set of attainable goals. The risk associated with trading the vagaries of the stock markets is probably the most important consideration as it has a profound effect on a trader's emotional control. You should not trade the stock markets with money you cannot afford to lose as there is considerable exposure to risk in any stock market transaction.

Furthermore, the past success of any trading method, strategy, or system is only indicative of future success. Under no circumstances should past success be misconstrued as a guarantee of future success!

Unless otherwise specified, the trading systems and strategies discussed on this website are intended for educational purposes only and are not meant to recommend or promote any trading system or strategy. You are expected to do your own research and testing to determine the validity of a trading method, system, or strategy on the market and instrument you wish to trade.

Basic Chart Patterns for Beginners

Basic Chart Patterns

The two basic elements of technical analysis, and the study of chart patterns in particular, are the concepts of support and resistance and trendlines. The Dow Theory of trends, for example, is based on support and resistance and states that a market is in an uptrend when it makes higher highs and higher lows, and is in a downtrend when it makes lower lows and lower highs.

The highs are formed on the chart at resistance levels, where selling is strong enough to push back and reverse a weaker rally in prices. The lows are formed on the chart at support levels, where buying is strong enough to reverse a decline in prices. Note: Support and resistance lines are often confused with trendlines, however, support and resistance lines are horizontal lines which trendlines are lines that slope in the direction of the trend.