Welcome to the wonderful world of chart patterns! I have a strong belief that any investor that plans on looking at a stocks price chart should have at least a brief understanding of some of the more commonly used chart patterns. It doesn't matter if you are a short term investor or a long term one, chart patterns show up in just about every time frame you can think of. Why is this? Well, the way that I like to think of it is that at any given time investors can be put into one of two categories, the Bulls and the Bears, Bulls are people with "Buy! Buy! Buy!" on their mind, and Bears are people with "Sell! Sell! Sell!" on their minds. The current stock price (and its direction) show the ongoing battle between the bulls and the bears. The stock price flows in the same direction as whoever is winning the current struggle. In the end its all about momentum, and if one group has the momentum, it will pull the stock price in that direction. But the further a stock travels the strong the opposition gets and eventually it will slow down, and you will encounter some major resistance against the current direction, then you'll usually see some support, and it will go back and forth while the market is trying to decide which direction to follow. It is at this point that chart patterns shine. They will let you know if a price reversal or continuation is going to happen because they represent common patterns that have predictable outcomes which show up at during these phases.

There are two main types of chart patterns, ones that confirm a continuation in the price direction and ones that point out a coming reversal in price direction. Both Continuation and Reversal patterns are very important to memorize and look out for when investing. It is not necessary to learn them all at once, but you will find that as you start to learn them, you’ll begin to notice them popping up in charts all the time. Spend some time working on identifying the patterns as they are happening, and you’ll be very glad you did. There would be too much information if I included all of the chart patterns in this one article, so what I am going to do is provide you with links to the individual chart pattern articles which I’ll be creating over the next couple of days and weeks, so make sure you come back often.

Continuation Patterns

As stated above, Continuation Patterns tell us that the stock will continue traveling in the same direction it was before it hit the resistance. An example of this is the Ascending Triangle which you can see below.

Please follow the links below to learn about each individual continuation chart pattern.

Flags and Pennants
Triangles (Symmetrical, Ascending, Descending)
Rectangle
Cup and Handle

Reversal Patterns

Reversal patterns show us that the current chart direction is going to change in the opposite direction of what it was traveling before it hit the resistance. An example of a reversal pattern can be seen here in the image of a Head and Shoulders chart pattern.

Please follow the links below to learn about each individual reversal chart pattern.

Double Tops and Bottoms
Triple Tops and Bottoms
Head and Shoulders (normal and inverted)
Wedges (Rising and Falling)

Please take some time to read through each of these chart patterns as they are added. The more chart patterns you learn to memorize, the quicker you will become at picking them out in real time, and this will hopefully improve your investing!

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Disclaimer: Any information contained in the above article represents my opinions only, and should not be construed as personalized investment advice. I cannot assess, verify or guarantee the suitability of any particular investment to any particular situation and the reader of the article bears complete responsibility for its own investment research and should seek the advice of a qualified investment professional that provides individualized advice prior to making any investment decisions. All opinions expressed and information and data provided therein are subject to change without notice.

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