Technical traders use the price history of any asset, and the price patterns that form, as a basis for making trading decision and analysis. This is called technical analysis, a technique that uses the price chart of an asset as a key determinant in forecasting where the price will go next.
Price charts are highly visual, showing where a stock price has been in the past, the price’s current trajectory, how volatile the price movements are, and whether the stock has a lot or little interest in it.
Chart patterns are a field of study within the larger field technical analysis. Chart patterns are geometric shapes created by the price movements of an asset, such as a stock, currency, or commodity. These geometric shapes provide a context for how the asset is moving right now, and the direction and magnitude of the price moves that may be forthcoming.
Chart patterns are a key tool in the technical trader’s arsenal. This tutorial covers the main types of charts patterns, including how to trade them and what insights they provide into current and future price movements.