Trendline Patterns
In our previous lesson, we looked at basic trendline trading strategies. We focused on trading in the path of least resistance, i.e., trading in the direction of the major trend by using intermediate and minor trendlines. We learned about waiting for trendline tests and the most probable outcome of a trendline test, depending on whether we are looking at the major trendline, the intermediate trendline, or the minor trendline. In this lesson we will turn our attention to trading with chart patterns that are based on trendline breaks.
There are several chart patterns that rely on trendlines, and more particularly, trendline breaks. These patterns include the Head and Shoulders pattern, the various Triangle patterns, and the Wedge pattern.