Chart Patterns

This is a discussion on Chart Patterns within the Swing & Position Trading forums, part of the Methods category; I've been using chart patterns for a long time. They're actually quite easy to trade. However they all have to ...

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Old Jan 25, 2018, 12:00pm   #16
 
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Chart Patterns

I've been using chart patterns for a long time. They're actually quite easy to trade. However they all have to qualify to be a good trade.

I have 3 favorite qualifiers that a chart pattern has to pass.
  1. MACD or a variation of it
  2. Stochastic RSI indicator. Separately they work good but this one is very good
  3. Keltner Channels work pretty good to.
Divergence is a must do with the indicators and the Keltner Channel just takes a bit of practice.

The best, and most profitable chart patterns are
  1. 123 Top/Bottom
  2. Bull/Bear Flags
  3. Various array of Triangles.

The Flags can be a great help in a breakout of almost any chart pattern.

There's an example of a flag on the chart I attached. Simply measure the length of the pole and use the top of the pole as a breakout point. Add the length of the pole to the BO and that can gives a good estimate of the next move.

I should note that the 2 indicators shown are:
  1. Top --- ADX +- D1
  2. Bottom --- Aroon
Never leave home without them
Attached Thumbnails
cbis-flag.jpg  
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Old Jan 25, 2018, 12:06pm   #17
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Well done for sharing your practical experience.
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Old Jan 25, 2018, 2:41pm   #18
 
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Chart Patterns 123

I found this stock NXTTF on the forum. It also has a good 123 Bottom price pattern. It's a bit late to jump into it for the 123 Bottom pattern but I think the Bull Flag would be a good buy on BO. The pole shows about $2.20 USD target.

If the indicators stay valid I will likely jump on board.
A NOTE. I have 2 other indicators for entry/exit.

NXTFF
Attached Thumbnails
nxtff.jpg  

Last edited by Penny Picks; Jan 25, 2018 at 2:55pm. Reason: Add a Chart
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Old Jan 25, 2018, 4:43pm   #19
 
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I tried to add this chart to the original post. It appears that I screwed up the edit.

Here's NXTTF showing my 2 trading indicators.

There is a good entry here but the post is about the
123 UP price pattern.
Attached Thumbnails
nxttf2.jpg  
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Old Jan 25, 2018, 5:10pm   #20
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Originally Posted by Kyleice View Post
Does anyone have chart patterns that they look for consistently? Looking to gain a little more knowledge in swing trading!
My favourite s are engulfing patterns, dojis and piercing patterns with one important note. No pattern has any significance unless market structure is also considered. For example, all the patterns that I just mentioned must be at or near a S/R level.
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Old Jan 25, 2018, 8:07pm   #21
 
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Originally Posted by Traderjohnsblog View Post
My favourite s are engulfing patterns, dojis and piercing patterns with one important note. No pattern has any significance unless market structure is also considered. For example, all the patterns that I just mentioned must be at or near a S/R level.
Candle sticks are always good. My problem with them is remembering the many different sticks. ie:
Evening Doji Star
Evening Star
Hammer
Harami

and the patterns seem never ending.

I do think you have a good idea. The problem is I'd be on the learning curve forever.
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Old Jan 25, 2018, 8:24pm   #22
 
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Originally Posted by tomorton View Post
I don't make any trade decisions off any chart patterns but this site provides really detailed analysis and statistics if that's the way you do it - http://thepatternsite.com/index.html.
A good verified chart pattern is fairly easy to make consistent money. The standard patterns are my all time favorites
  1. 123 Top / Bottom
  2. Bull / Bear Flags
  3. Symmetrical triangles
These are only a few but work pretty good for me.
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Old Jan 25, 2018, 8:25pm   #23
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The ones that I mentioned often occur at the end of retracement/resumption of a trend. If you just look for that set up it will make you money. The rest can be learned over time. What I always hated was when some guru renamed the patterns with thier own name. That always confused me.
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Old Jan 26, 2018, 3:49am   #24
 
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plenty of patterns showing up intraday, but you have to keep your eyes peeled and be able to react in real time.



Click the image to open in full size.
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Old Jan 26, 2018, 7:45am   #25
 
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Originally Posted by jjames69 View Post
plenty of patterns showing up intraday, but you have to keep your eyes peeled and be able to react in real time.



Click the image to open in full size.
Scanning the chart I see quite a few good patterns. Here's the problem for me with "you have to keep your eyes peeled and be able to react in real time" My brain doesn't work that fast any longer. Age is not a trader's friend.
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Old Jan 26, 2018, 8:01am   #26
 
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Originally Posted by Penny Picks View Post
Scanning the chart I see quite a few good patterns. Here's the problem for me with "you have to keep your eyes peeled and be able to react in real time" My brain doesn't work that fast any longer. Age is not a trader's friend.
it's certainly a lot harder than it looks. lol. its nice if you can find them on a 5 minute bar so you at least have a little time to react. i'm following 8 stocks on both 1 and 5 minute bar chart intraday. i feel like its easier to find setups this way, and i only have to be in a trade for a few minutes instead of days and weeks. patterns can get scarce on the one day bar charts. the markets getting volatile so some patterns should be setting up soon.
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Old Jan 27, 2018, 9:16am   #27
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My brain doesn't work that fast any longer. Age is not a trader's friend.
move to higher timeframes?
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Old Jan 27, 2018, 1:13pm   #28
 
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Originally Posted by Kaeso View Post
move to higher timeframes?
I did that some time ago. I use day (Live) data and my trades are setup
for 'Trend' trading. Usually I check for an UP 'Monthly' then wait for an UP 'Weekly'. The idea is to buy on the UP Weekly. I've tuned it a bit and use the Daily to get a better entry. This is all provided by a "Paid For" service

It's relatively easy. ie; With an UP Monthly Triangle you buy on the 1st UP weekly triangle. Then Bail on the 1st down weekly. Then, when another UP WEEKLY shows; jump back in.

Do a TRADE MARKET CLUB TRIANGLES search on YouTube and you can get a better visual.

It's actually a LAZY Trader's way to trade.
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Old Jan 27, 2018, 4:21pm   #29
 
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Originally Posted by tomorton View Post
I don't make any trade decisions off any chart patterns but this site provides really detailed analysis and statistics if that's the way you do it - http://thepatternsite.com/index.html.
Here's a thought tomorton. Chart patterns basically display the 'Psychic' of the traders. ie: Bears pushing going down.
Bulls jump in and think it's time to make a profit by pushing prices up. Bears jump back in an say "I'm short for a reason and force prices to dip back down, only not quite as far as the last push down. Then,... Bulls jump back in and retake control of the prices. It is interpreted like this.

1st down turning point is #1
1st Rally peak is point #2
2nd down turning point (Not as far as the 1st down turn) is called #3

Trade entry is off the #2 point Place a GTC buy off of the, or a few ticks above the #2.

It's a classic 1-2-3 chart/price pattern That fits Bottom and Top of a price run.

Also note the 'BULL' flag following the 123 pattern. An UP Move At the Break out above the pole can advance the length of the pole; not an absolute but a good indicator for a move.

These all have excellent entry points.

another note. These patterns work just as well for a down moving market.
Attached Thumbnails
123-pattern.jpg  
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Thanks! The following members like this post: tomorton
Old Jan 27, 2018, 6:26pm   #30
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Its all good, classic pattern analysis Penny Picks.
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