This article has been translated from English to Gen Z Slang.
That's a whole load of chart patterns we just hit you with. We're low-key tired, so we were gonna dip and leave you to it...
Just kiddin'! We ain't bouncin' until you're Gucci!
In this section, we’ll spill the tea on how to use these chart patterns to level up your game.Knowing how the tools work ain't enough; you gotta vibe with them too. And with all these new gems in your toolkit, let's get those gains lit!
Let's do a quick recap of the chart patterns we just vibed with and sort them by the signals they throw.
Reversal Chart Patterns
Reversal patterns are those chart vibes that hint that the current trend's about to switch lanes.
If a reversal pattern pops up during an uptrend, it’s giving you a heads-up that the trend's gonna flip and prices might dip soon.But if you spot a reversal pattern during a downtrend, get ready for prices to zoom up later.
In this sesh, we talked about six chart patterns that drop reversal hints. Can you name all six?
If you nailed all six, you’re getting those brownie points!
To flex with these patterns, just drop an order past the neckline and ride the new trend. Aim for a target about the same length as the pattern height.
For example, if a double bottom shows up, go long at the neckline's top and aim for a target as tall as the distance from the bottoms to the neckline.
Don't ghost your risk management; make sure to set your stops! A chill stop loss can be around the middle of the chart pattern.
Like, measure the double bottoms' distance from the neckline, halve that, and use it for your stop.
Continuation Chart Patterns
Continuation chart patterns forecast that the current trend is just catching its breath and will keep going.
These are also called consolidation patterns because they show buyers or sellers taking a quick nap before moving forward in the same trend direction.
Trends don’t move in a straight line up or down – they take a break, shuffle sideways, and then power up to continue the trend.
We've gone over some continuation chart patterns, like wedges, rectangles, and pennants. Remember, wedges can be both reversal or continuation patterns based on the trend they pop up in.
To vibe with these patterns, place an order around the formation's top or bottom, keeping it in line with the trend.
Go for a target equal to the pattern size for wedges and rectangles.For pennants, aim higher and target the pennant's mast height.
For continuation patterns, stops usually chill above or below the actual chart formation.
When dealing with a bearish rectangle, put your stop a few pips above the rectangle's resistance.
Bilateral Chart Patterns
Bilateral chart patterns are tricky because they signal that the price might bounce either way.
Wait, what kind of signal is that?!
A bilateral signal, duh.
This is where triangle formations come in. Remember when we said the price might break either up or down with triangles?
To play these chart patterns, think about both scenarios (upside or downside breakout) and split your orders above and below the formation.
If one order gets activated, cancel the other. Either way, you're in the game.Double the vibes, double the fun!
But watch out for false breaks if your entry orders are too close to the formation's edges.
So keep it real and don’t forget to set your stops too!