Price depends on a lot of variables, so it often doesn’t behave as predictable as many traders would like. Many patterns are ambiguous and can be classified as both reversal and continuation pattern. The self-fulfilling quality of patterns on charts can’t be ignored.īut price can do whatever it wants, and doesn’t need to obey what a patterns says. I don’t rely heavily on all of these patterns in my strategy, but it is very important to know they exist, as a lot of traders look at these patterns, recognize them, and trade based off of them. Continuation patterns indicate a pause in trend and indicate that the previous direction will resume after a period of time. Reversal patterns indicate a change of trend and can be broken down into top and bottom patterns.First determine what kind of patterns you’d like to trade. The majority of chart patterns fall into two categories:
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