Chart pattern

From Traderpedia

A formation which is created on a plot of prices, often used to make analysis of future price action.

A Chart Pattern is a pattern created by either OHLC bars, Candlesticks, a Line Graph or other charting software. It can be over any timescale, from tick bars upwards, although the theory is that the longer a pattern takes to form, the more reliable it is.

A good example of a chart pattern would be the popular head and shoulders formation, ascending triangle or similar.

In theory, chart patterns allow technical analysts to predict the future price of an instrument based upon an exisiting pattern and price.

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