!

! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
Table&of&Contents&
&
Risk&Warning&....................................................................................................................................................&2&
&
CHART&PATTERNS&EXPLAINED:&.........................................................................................................................&3&
&&&&&Introduction&.................................................................................................................................................&3&
&&&&&Why&do&chart&Patterns&Occur?&.....................................................................................................................&3&
&&&&&LongUTerm&Patterns&(LT)&..............................................................................................................................&4&
&&&&&ShortUTerm&Patterns&(ST)&.............................................................................................................................&5&
&&&&&ShortUTerm&vs&LongUTerm:&Which&is&better?&................................................................................................&6&
&&&&&Continuation,&Reversal,&Bullish&or&Bearish?&.................................................................................................&6&
&&&&&Pattern&Confirmation&...................................................................................................................................&7&
&
LONGUTERM&PATTERNS&(LT):&............................................................................................................................&7&
&&&&&Continuation&Patterns&..................................................................................................................................&7&
&&&&&Reversal&Patterns&.........................................................................................................................................&9&&&
&&&&&What&they&Really&Look&Like&..........................................................................................................................&9&
&&&&&LT&Patterns:&Final&Pointers&.........................................................................................................................&10&
&
SHORTUTERM&PATTERNS&(ST):&........................................................................................................................&10&
&&&&&Bar&Charts&vs&Candlesticks&.........................................................................................................................&11&
&&&&&Single&Bar&Patterns&.....................................................................................................................................&11&
&&&&&MultiUBar&Patterns&.....................................................................................................................................&12&
&&&&&Rejection&Spikes&.........................................................................................................................................&13&
&&&&&Lower&timeframes&=&More&signals&false&signals!&(Potentially)&...................................................................&14&
&
ST&Patterns:&Summary&....................................................................................................................................&15&
&
REDUCE&YOUR&LEARNING&CURVE:&..................................................................................................................&15&
&
&
& &

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 1&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
Risk&Warning&
&
Trading&in&the&Foreign&Exchange&and&CFDs&market&involves&a&significant&and&substantial&risk&of&loss&and&may&not&
be&suitable&for&everyone.&You&should&carefully&consider&whether&trading&is&suitable&for&you&in&light&of&your&age,&
income,&personal&circumstances,&trading&knowledge,&and&financial&resources.&Only&true&discretionary&income&
should&be&used&for&trading&in&the&Foreign&Exchange&and&CFDs&market.&Any&opinion,&market&analysis&or&other&
information&of&any&kind&contained&is&subject&to&change&at&any&time.&Nothing&in&this&presentation&should&be&
construed&as&a&solicitation&to&trade&in&the&Foreign&Exchange&or&CFDs&market.&If&you&are&considering&trading&in&the&
Foreign&Exchange&or&CFDs&market,&before&you&trade,&make&sure&you&understand&how&the&spot&market&operates,&
how&ThinkMarkets&&is&compensated,&understand&the&ThinkMarkets&&trading&contract,&rules&and&be&thoroughly&
familiar&with&the&operation&of&and&the&limitations&of&the&platform&on&which&you&are&going&to&trade.&&A&Financial&
Services&Guide&(&FSG)&and&Product&Disclosure&Statements&(PDS)&for&these&products&is&available&from&TF&GLOBAL&
MARKETS&(AUST)&PTY&LTD&by&emailing&compliance@[Link].&&The&FSG&and&PDS&should&be&
considered&before&deciding&to&enter&into&any&Derivative&transactions&with&TF&GLOBAL&MARKETS&(AUST)&PTY&LTD.&
The&information&on&the&presentation&is&not&directed&at&residents&in&any&country&or&jurisdiction&where&such&
distribution&or&use&would&be&contrary&to&local&law&or&regulation.&2015&TF&GLOBAL&MARKETS&(AUST)&PTY&LTD.&All&
rights&reserved.&AFSL&424700.&ABN&69&158&361&561.&Please&note:&We&do&not&service&US&entities&or&residents.&
&
&
&
&
&
&
&
Thank&you&for&downloading&this&Trading&Guide.&This&is&the&second&of&a&4Upart&series&to&introduce&you&to&Technical&
Analysis.&Each&part&has&a&video&and&accompanying&trading&guide&which&you&can&view&below.&
&
Part&1:&Trends&
Part&2:&High&Probability&Support&&&Resistance&
Part&3:&Chart&Patterns&Trading&
Part&4:&TA&Techniques&Combined&
&
&
&
&
&
&
&
&
Chart&Pattern&Trading&
By&Matt&Simpson&
Copyright&@&2015&TF&GLOBAL&MARKETS&(AUST)&PTY&LTD&
All&Rights&Reserved! &

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 2&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
CHART&PATTERNS&EXPLAINED&
&
Introduction&
&
Out&of&all&the&topics&within&this&series,&this&is&by&far&the&hardest&one&to&fit&into&one&topic.&If&anything&this&should&be&
split&into&two&topics&but&then&we&have&to&remember&this&is&an&introductory&guide.&&
&
It&was&not&until&I&came&to&write&this&section&and&host&the&webinars&that&I&realised&how&many&intricacies&and&areas&of&
judgement&I&make&using&these&patterns.&There&are&many&textbooks&and&websites&that&will&bog&you&down&with&exotic&
names&and&fancy&patterns&which&provide&little,&if&any,&practical&use&for&dayUtoUday&analysis&and&trading.&Therefor&I&
have&tried&to&avoid&this&road,&and&instead&provide&the&basics&along&with&the&‘what&you&really&need&to&know&tips’&to&
make&any&use&of&the&most&basic&patterns.&&&&
&
I&have&split&it&into&2&main&sections&by&their&style:&LongUterm&patterns;&shortUterm&patterns;&Both&styles&possess&their&
own&strengths&and,&weaknesses,&require&different&approaches&yet&at&the&same&time,&complement&each&other&as&
though&they&were&always&meant&to&be.&&
&
If&you&have&to&take&one&piece&of&advice&from&this&guide&please&take&the&following:&&
&
You&will&significantly&increase&the&usability&of&each&style&by&combining&the&two&together.&
&
Many&try&to&master&one&style&and&use&them&in&isolation&(as&I&did)&but&they&will&create&independent&problems&for&your&
analysis&and&trading.&By&blending&the&two&together&you&will&create&a&more&structured&and&comprehensive&view&of&
price.&
&
Combine&these&two&styles&of&patterns&recognition&with&trends,&support&and&resistance&and&you&will&never&look&at&a&
price&chart&the&same&way&again.&&
&
Why&do&chart&Patterns&Occur?&
&
The&concept&is&similar&to&support&&&resistance:&At&any&one&time&market&participants&have&one&of&three&choices&U&to&
buy,&sell&or&stand&aside.&As&this&ratio&between&the&three&groups&change&over&time,&so&does&the&supply&and&demand&for&
any&given&market.&As&this&force&changes,&so&does&price.&This&is&all&based&upon&participants&(and&groups&of)&opinions&of&
where&price&‘should’&be.&&
&
As&the&battle&towards&the&‘correct’&market&price&unfolds&we&see&trends&and&oscillations&develop,&which&when&
combined&form&familiar&patterns.&&
&
If&we&can&identify&familiar&patterns,&technical&analysts&believe&that&[to&a&certain&degree]&price&can&become&
predictable.&&
&
The&collective&individuals&within&any&market&constantly&changes,&along&with&personal&opinions&of&where&price&‘should&
be’,&or&why&they&should&move&in&the&first&place.&&
&
Regardless…&a&Technical&Analyst&always&takes&comfort&in&the&fact&that&history&does&repeat&itself&as&long&as&prices&are&
always&governed&by&supply&and&demand.&&&
&
! !

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 3&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
LongMTerm&Patterns&(LT)&
&
I&refer&to&longUterm&patterns&as&those&which&take&several&(and&usually&much&more)&bars&of&data&to&create&and&they&are&
also&commonly&referred&to&as&Western&Chart&Patterns.&
&
They&are&not&related&to&the&trading&timeframe&they&are&seen&on,&as&LT&patterns&can&be&seen&on&any&timeframe.&
However&a&rule&of&thumb&is&that&the&higher&the&timeframe&you&see&a&chart&pattern&it&is&generally&consideredto&be&
more&relable,&and&the&lower&the&timeframe&tends&to&generate&more&fale&signals.&&
&
You&can&see&the&same&(or&similar)&patterns&on&a&1Uminute&chart&which&may&only&take&5&minutes&to&create,&whilst&also&
seeing&patterns&which&last&years&or&decades&on&the&Monthly&timeframes.&
&
Below&is&an&example&of&a&Double&Bottom&pattern&which&took&18&bars&to&create.&I&have&hidden&the&timeframes&as&it&is&
irrelevant&–&this&could&be&a&1&minute&chart&or&a&1&day&chart,&but&the&concept&is&the&same.&&
&
&
LT&Patterns&Provide&&
U&Structure&(Once&combined&with&trends&and&S/R)&
U&Future&Direction&
U&Price&Objectives&(Targets)&
&
Examples:&&
"! Double&Bottom&(pictured),&Triple&Bottom,&Double&Top,&Triple&Top,&
"! Wedge,&Head&&&Shoulders,&&&
"! Symmetrical&Triangle,&Ascending&Triangle,&Descending&Triangle,&&
"! Pennant,&Flag&

&
& &
Structure:&&
If&we&are&familiar&with&these&patterns&and&can&identify&the&potential)for&one&
to&appear,&then&it&helps&us&gauge&very&roughly&at&what&stage&of&the&pattern&
we&are&at.&In&turn&this&either&helps&us&to&anticipate&the&breakout&of&a&pattern&
to&build&our&trading&plan,&or&avoid&jumping&in&too&early.&&
&
Potential&Future&direction:&&
Once&a&pattern&is&confirmed,&regardless&of&whether&it&is&a&continuation&or&
reversal&pattern,&we&then&have&a&directional&bias&for&price&to&continue&
trading.&&
&
Profit&Objectives:&&
Once&we&have&profit&objectives&(or&targets)&defined&we&can&then&see&if&these&
overlap&areas&of&S/R&to&build&a&stronger&case&for&price&reaching&or&reacting&at&
these&levels.&&
&

&
&
!
!
!
[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 4&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
ShortMTerm&Patterns&(ST)&
& &
ShortUterm&patterns&can&be&produced&from&a&single&bar&of&data&or&more&and&require& &
either&Bar&Charts&or&Candlestick&charts&to&identify&them.&&As&with&LT&patterns&they&appear&
on&all&trading&timeframes&and&generally&considered&to&generate&more&reliable&signals&the&
higher&the&timeframe.&&
&
ShortMTerm&Patterns&(ST)&
For&example,&a&ST&pattern&can&be&made&up&from&1U3&bars&of&data,&and&may&form&on&any&
tradable&timeframes&such&as&1&minute,&1&hour,&1&day&or&1&week&etc.&&
&
ST&Provide&& &
-! Signs&of&potential&strength&or&weakness&
-! Entry&Signals&
-! Exit&Signals&
-! Trade&Management&
&
&
Signs&of&potential&strength&and&weakness:&
You&may&be&monitoring&a&trend&and&trying&to&identify&the&end&of&phase&2&or&the&
beginning&of&phase&1.&Some&candle&formations&would&suggest&a&turning&point.&
However&the&key&with&ST&candles&is&to&blend&them&form&trends,&support&and&
resistance&to&make&them&higher&probability.&&
&
&
Entry&signals:&&
Some&patterns&are&ideal&for&generating&a&buy&or&sell&signals.&&
However&the&trick&here&is&to&identify&a&trend&and&areas&of&support&or&resistance&
which&the&&before&&
&
&
Trade&Management:&
When&you&are&in&a&trade&and&price&is&unfolding&can&adjust&your&stoploss&to&suit&
the&price&action.&For&example&if&you&see&long&candles&form&in&favour&of&your&
trade,&you&can&use&the&highs&or&lows&of&these&candles&to&trail&your&stop&behind.&&
&
You&could&also&move&your&stop&loss&if&a&candle&formation&appear&which&may&
threaten&the&trade&you&are&in.&This&would&be&a&defensive&move.&
&
&
&
&
! !

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 5&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
ShortMTerm&vs&LongMTerm:&Which&is&better?&&
& &
Many&Analysts&or&Traders&prefer&to&specialise&in&one&form&of&analysis.&
However&I&believe&that&by&using&the&two&in&tandem&you&will&achieve&a&
much&more&comprehensive&picture&as&their&strengths&and&weaknesses&
complement&each&other&very&well.&&&
&
For&example,&whilst&LT&patterns&project&future&direction&and&price&
targets,&they&can&be&particularly&tricky&to&time&your&entrance&to&a&
trade&whilst&maintaining&a&decent&reward/risk&ratio.&And&whilst&ST&
patterns&generate&great&timing&for&entry&signals,&they&do&not&provide&
you&with&a&profit&objective,&or&much&future&direction&beyond&the&
candles&you&are&currently&looking&at.&&&
& &
For&those&reasons&I&would&strongly&urge&you&to&combine&the&two&for&a&
fuller&picture&of&what&price&is&telling&you.&
&
&
&
Continuation,&Reversal,&Bullish&or&Bearish?&&
&
As&the&name&implies,&continuation&patterns&assume&a&breakout&of&the&pattern&in&the&same&direction&in&which&it&
entered&the&pattern.&Reversal&patterns&however&break&out&of&the&pattern&in&the&opposite&direction&to&which&it&
entered&the&pattern.&&&&
&
&
Bullish&patterns&appear&during&an&uptrend&and&bearish&
patterns&appear&during&downtrends.&&
&
However&a&‘Bearish&Reversal’&will&be&seen&during&a&bullish&
trend,&as&it&is&suggesting&we&are&about&to&change&form&
bullish&to&bearish.&So&a&bullish&reversal&will&appear&during&
a&downtrend&

&
& &
Trends&and&Patterns:&&
Refer&to&lesson&one&TRENDS&to&learn&how&to&identify&a&
trend.&&
&
-! Once&a&trend&has&been&established&(or&at&least&a&
suspected&trend)&you&are&statistically&more&likely&to&
find&a&continuation&pattern&on&a&timeframe&below&
the&one&you&have&identified&a&trend&on.&
-! Whilst&every&trend&will&have&a&reversal&at&some&point,&
remember&that&you&are&statistically&less)likely&to&
identify&the&end&of&a&trend.&
& -! Seek&reversal&signals&on&lower&timeframes&that&trade&
&
in)the)direction&of&the&higer&timeframe.&&
!!

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 6&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
Pattern&Confirmation&
&
So&how&do&we&confirm&a&pattern?&There&are&several&methods&and&it&is&down&to&personal&preference&as&to&how&you&
decide&to&confirm&your&patterns.&However&please&be&warned&that&the&word&‘confirmation’&can&be&a&little&misleading&
as&just&because&we&confirm&a&pattern&it&does&not&guarantee&that&the&pattern&will&be&fulfilled.&Confirmation&simply&
means&‘a&point&on&the&chart&in&which&we&assume,&when&crossed,&the&pattern&may&reach&a&target’.&
&
A&pattern&can&be&confirmed,&only&to&see&price&reverse&and&trade&back&into&the&suspected&pattern&to&make&it&a&‘failed&
pattern’.&Each&pattern&has&a&breakout&line&which&is&similar&to&drawing&a&trendline&or&S/R&level.&&
&
Breakout:&We&simply&require&price&to&cross&the&line.&This&
is&an&ideal&method&if&you&want&to&set&pending&orders&to&
catch&the&breakout.&However&price&can&(and&does)&return&
back&over&the&breakout&line&to&invalidate&the&pattern.&&
&
Close:&We&want&to&see&price&close&a&bar&over&the&line&to&
confirm&the&signal.&This&provides&extra&confidence&and&
reduces&the&chances&of&it&being&a&failed&signal,&however&
you&also&risk&missing&the&move&and&for&price&to&take&off&
without&you.&&
&
Multiple&Closes:&Some&analysts&use&2&or&3&closes&to&
confirm&the&pattern.&Whilst&this&provides&even&greater&
confidence&you&again&risk&the&chance&of&missing&the&
move&for&it&to&be&profitable&enough&(for&your&reward/risk&
ratio)&
&
Throwback:&A&throwback&is&my&preferred&style&if&trading&
the&pattern.&This&is&where&price&breakouts&out&or&closes&
to&confirm&the&pattern,&but&then&returns&to&the&breakout&
line.&If&this&level&then&holds&as&either&support&or&
resistance&it&can&provide&an&excellent&entry&with&greater&
confidence&and&precision&to&achieve&a&much&better&
reward/risk&ratio.&However&the&downside&to&this&
approach&is&you&are&much&more&likely&to&repeatedly&miss&
moves&if&it&doesn’t&quite&return&to&the&breakout&line.&&&&&&

&
&
I&would&not&say&that&one&method&is&not&particularly&
better&than&the&other,&but&it&is&important&to&use&a&
method&which&suits&your&trading&style&and&personality.&
For&example&an&aggressive&dayUtrader&who&must&be&in&
the&markets&as&much&as&possible&may&not&have&the&
patience&to&wait&for&a&throwback&(in&fear&of&missing&out)&
so&a&breakout&approach&may&be&better.&Similarly&and&End&
of&Day&trader&with&more&patience&may&be&better&suited&
to&the&throwback.&&
&
LONGMTERM&PATTERNS&(LT)&&
&
Continuation&Patterns&
[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374&
& & 7&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
Whilst&LT&patterns&(Western&Patterns)&look&simple&in&textbooks& Breakouts&can….&&
and&hindsight&they&are&by&no&means&easy&to&trade.&The&following& "! Be&clean&and&swift&(no&looking&back)&
pictures&are&here&merely&to&show&you&the&ideal&structure&and& "! Retrace&to&the&breakout&area&(throwback)&&
methods&of&projecting&targets.&Real&price&charts&are&never&this& "! Completely&fail&and&trade&back&inside&of&the&
pretty&–&the&key&is&to&observe&the&relationships&between&the&swing& breakout&line&to&invalidate&the&pattern&
points&on&the&charts.&& &
& Targets:&
For&example&in&an&uptrend&you&would&observe&the&HH&and&HL& "! Usually&the&same&distance&from&the&depth&
(lesson&1)&but&in&a&chart&pattern&you&would&also&observe&that&these& of&the&pattern&itself&
swing&points&are&contracting&over&time&(getting&closer&together)&& "! Price&doesn’t&necessarily&have&to&get&there&
& in&a&straight&line&
The&key&to&continuation&patterns&is&to&use&the&higher&timeframe&to& &
identify&the&trend&(lesson&1)&and&seek&continuation&patterns&on&the&
lower&timeframes.&

&&&&&&&& &
!
TRIANGLES&
Whilst&triangles&have&a&tendency&to&be&continuation&patterns&they&are&not&always.&For&example&an&ascending&triangle&
really&only&consists&of&higher&lows&forming&beneath&resistance.&Neither&of&these&lines&need&be&accurate,&and&if&the&
lower&line&breaks&first&it&still&counts&as&a&triangle&just&not&a&continuation&pattern&under&those&circumstances…&&
However&they&do&provide&excellent&directional&trade&plans&if&and&when&confirmed,&with&price&objectives.&
&
A&symmetrical&triangle&is&simply&when&the&two&‘lines’&contract&(or&the&upper&and&lower&swing&points&come&closer&
together).&&
&
PENNANTS&/&FLAGS&
By&far&the&messiest&and&difficult&of&continuation&patterns&to&
trade.&Personally&I&use&them&purely&for&observation&and&to&
judge&‘phase&2’&(retracements)&before&a&supposed&
resumption&of&a&trend.&&
&
Typically&you&measure&the&run&into&the&‘flag’&and&project&this&
for&you&target.&Please&take&this&last&point&with&several&barrels&
of&salt&–&to&me&they&just&highlight&retracements.&&
&
&

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 8&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
Reversal&Patterns&
&
I&am&sure&you&have&heard&of&the&saying&‘buy&low&and&sell&high’.&It&sounds&simple&enough&but&attempting&to&do&this&is&
far&harder&than&it&sounds.&I&have&observed&how&the&majority&of&newer&traders&become&fixated&with&trading&reversals&
in&an&attempt&to&get&into&that&‘trade&of&a&lifetime’&before&everyone&else.&I&have&also&observed&how&these&same&traders&
tend&to&lack&the&ability&to&stay&in&a&trade&once&they&have&entered.&This&may&be&because&they&traded&against&a&string&
trend,&or&the&occasion&they&are&in&profit&they&move&their&SL&too&soon,&so&get&stopped&out&anyway.&&
&
If&you&must&trade&reversal,&always&refer&to&the&trend&and&trade&reversal&patterns&that&bring&you&back&to&the&dominant&
trend.&For&example,&if:&Daily&is&bullish&(phase&one);&Hourly&is&bullish&but&phase&2&(retracement);&Seek&bullish&reversal&
patterns&to&trade&on&hourly&chart,&to&trade&in&the&direction&of&the&daily&bullish&trend.&&
!
& Wedges&&
"! After&a&strong&trend&the&swings&begin&to&
contract&and&often&in&defined&cycles&
"! The&catch&the&market&out&and&can&move&very&
fast&when&the&realisation&kicks&in&the&trend&is&
over&
"! Similar&to&a&broken&trendline;&Can&provide&
good&opportunities&to&enter&a&trade&if&market&
reUtest&the&broken&trendline&
"! Do&not&necessarily&have&to&obey&trendlines.&
Observe&the&relationship&between&the&swings&
to&visualise&the&balance&between&buyers,&
sellers&and&onUparticipants&is&changing.&&
&
Double/Triple&Tops&and&Bottoms&
"! Can&be&difficult&to&trade&because&(like&
flags/pennants)&they&are&often&very&
messy&
"! Good&for&observational&purposes&and&
targets&
"! Act&as&a&good&warning&that&trend&is&
losing&strength&(due&to&the&lower&
high/low)&
"! Easier&to&enter&after&a&breakout&&

&
&&&&& Head&and&Shoulders&(Inverted&H&S&on&market&bottoms)&
"! Generally&better&when&the&RS&(right&Shoulder)&is&smaller&than&LS.&&
"! Similar&to&wedges&make&excellent&trading&opportunities&if&market&
retests&the&broken&trendline&(neckline)&
"! Break&outs&can&be&very&strong&and&fast,&particularly&in&stock/Index&
markets&after&a&bullish&trend&when&the&markets&panic&and&offload&
"! This&can&make&them&difficult&to&enter&on&the&breakout&or&get&a&
decent&entry&price&(due&to&slippage&and&price&gaps&etc.)&
"! I&prefer&to&confirm&patterns&then&look&for&suitable&retracement&
before&entering&in&direction&of&the&breakout.&&
&
&
& &
&
What&they&Really&Look&Like&
[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374&
& & 9&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
Triple&Top:&&
Lots&of&noise&around&the&support&line&and&the&
breakout&was&hard&and&fast&which&made&it&difficult&
to&enter.&However&it&provided&a&strong&bearish&trend&
to&trade&on&lower&timframes&after&the&breakout.&&
&
Triangles:&&
Lots&of&noise&around&resistance&lines,&but&noticed&
how&their&lows&were&being&formed&as&new&buyers&
came&in&to&push&prices&up&(eventually)&
&
Bullish&Wedge:&
Notice&how&price&oscillates&as&the&swing&points&
converge.&They&also&increase&in&timing&before&the&
eventual&breakout.&&&

&
&
&
&
LT&Patterns:&Final&Pointers&&
&
Patterns&fail!&Like&any&technique,&nothing&in&this&game&is&guaranteed.&They&provide&a&guide&to&potential)future&price&
direction&and&targets&whilst&also&aiding&our&trading&plans&–&that&is&all…&
&
-! Easier&to&spot&after&the&event…&but&you&can&still&build&a&plan&around&them&after&the&breakout.&&
-! Textbook&patterns&usually&too&good&to&be&true&
-! Need&not&be&neat&and&tidy&
-! Observe&the&relationship&between&the&swings&and&‘join)the)dots’.)&
-! Generally&more&reliable&the&higher&the&timeframe&they&appear&
-! Look&at&the&bigger&picture:&Zooming&out&and&using&bar&charts&can&help&to&identify&these&patterns&easier&
-! Use&multiple&timeframes&with&trends,&support&and&resistance&to&filter&higher&probability&patterns&
&

&
SHORTMTERM&PATTERNS&(ST)&
!

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 10&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
Bar&Charts&vs&Candlesticks&&
&
Japanese&Candlesticks&have&been&used&by&traders&since&the&1700s&and&very&popular&amongst&Forex&Traders.&When&
you&consider&there&are&many&patterns&varying&from&1&candle&to&several&candles,&by&the&time&you&start&mixing&
combinations&you&literally&have&hundreds&of&patterns&names&to&learn.&My&advice&here&is&that&by&learning&the&names&of&
all&of&the&patterns&will&not&necessarily&make&a&better&trader.&In&fact&the&opposite&is&probably&true…&
&
Bar&charts&are&the&Western&equivalent&and&created&using&exactly&the&same&information:&OHLC&(Open,&High,&Low,&and&
Close).&However&their&interpretation&is&slightly&different.&
&
Bar&Charts:&Focus&on&the&relationship&between&the&highs&and&lows&of&the&current&bar&compared&to&the&previous&bar.&&
Candlesticks:&Focus&on&the&relationship&between&the&bodies&and&Wicks.&&
&
Seeing&as&both&candlesticks&and&bars&use&the&same&information&to&construct&them&(OHLC)&you&can&indeed&mix&both&
forms&of&analysis.&However&seeing&as&Candlesticks&are&visually&easier&to&interpret,&many&use&Candlestick&as&the&
preferred&method&to&use&both&forms&of&analysis.&&&
&

&
& &
&
&
&
***&Warning&***&
&
I&genuinely&believe&using&Candlesticks&or&Bar&Chart&in&isolation&to&be&a&dangerous&way&to&analyse&or&trade.&This&is&
because&they&only&really&pay&attention&to&current&price&action,&which&can&have&the&consequence&of&jumping&in&to&
lower&probability&trades,&or&getting&very&confused&about&the&potential&direction&of&price.&&
&
However&they&do&help&fineUtune&the&picture&after&you&have&identified&trend,&S/R&and&LT&chart&patterns.&ST&Patterns&
really&are&the&last&thing&I&look&at&as&part&of&my&analysis.&&
&
Also&as&this&is&an&Introductory&guide&to&TA&I&will&focus&on&a&select&few&patterns&which&incidentally&are&the&only&ones&I&
really&pay&any&attention&to&for&my&own&trading.&&
&
&
&
Single&Bar&Patterns&&
&
Doji’s:&Are&simply&candles&which&
open&and&close&at&approximately&the&
same&level.&Every&single&one&of&these&
Doji’s&to&the&right&has&specific&name,&
however&knowing&these&names&will&
not&really&help&you.&&
&& &
[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 11&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
& Doji&Warning:&Whilst&they&can&be&useful&to&warn&of&a&sideways&correction&or&
What&you&need&to&focus&on&is&the& reversal&to&a&trend,&they&can&also&signify&low&liquidity&in&a&market.&You&will&
relationship&between&the&length&of& typically&see&lots&of&these&patterns&form&during&bank&holidays,&or&between&
the&wicks&(or&rejection&areas)&and& market&open&or&close&times,&particuarly&on&the&lower&timeframes.&&
the&body&(the&open&and&the&close).&&
& & & &
Bullish&Hammer:&& Hanging&Man:&
Some&Doji’s&require&an&established& Not&quite&as&reliable&a&
trend&to&identify&what&it&is.&On&the& Bullish&Hammer&
left&we&have&a&Bullish&Hammer,&as& however&it&does&
we&were&within&a&downtrend&and& highlight&a&weakness&in&
this&reversed&higher.&However&this& the&preceding&trend&and&
same&pattern&is&called&something& indecision&at&the&
different&during&an&uptrend…&(see& supposed&top.&&
Hanging&Man)&&
)
& )
&
Inverted&Hammer:&&& Shooting&Star:&
Not&as&reliable&as&Hammers&because& The&bearish&equivalent&
whilst&bulls&did&attempt&to&push& to&a&Bullish&Hammer,&
price&higher&the&session&still&closed& the&session&has&seen&a&
nearer&to&the&lows.&However&it&does& failed&attempt&to&keep&
suggest&bearish&sentiment&is& prices&higher&and&price&
changing&and&losing&momentum.&& has&lost&most&(and&
sometimes&more)&than&
initial&gains.&This&is&a&
)
blow&for&the&bulls…&&&)

)
Engulfing&Candles&/&Outside&Bars:&& & Inside&Bars:&
The&direction&(or&colour)&they&close& Similar&to&Doji’s&they&
on&dictates&if&it&is&a&bullish&or&bearish& can&provide&doubt&to&
sign.&Unfortunately&they&rarely& the&preciding&trend.&The&
provide&good&entry&signals&as&they& closing&direction&(up&or&
are&took&large&but&they&can&signify& down)&dictates&their&
an&important&change&in&the& bullish&or&bearish&bias.&
sentiment.&& & They&are&to&Engulfing& &
& Bars&as&Inverted&
& Hammers&are&to&
Hammers&–&not&quite&as&
significant,&but&
noteworthy.&&
&
MultiMBar&Patterns&&
&
MultiUbar&candles&(usually&2U3&bar&patterns,&but&can&be&more)&are&generally&more&reliable&than&single&bar&patterns.&
And&as&per&usual,&the&higher&the&timeframe&they&appear&on,&the&higher&the&reliability&of&the&pattern&can&assumed&to&
be.&There&are&a&plethora&of&multiUbar&patterns&however&I&will&only&cover&the&ones&I&tend&to&use&the&most&frequently&as&
I&have&found&them&to&be&more&reliable.&!
& & & &
Morning&Star&Reversal&(Bullish)& Evening&Star&Reversals&(Bearish)&
I&frequently&see&and&use&this&pattern&
as&I&find&it&one&of&the&more&reliable&
[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 12&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
candle&patterns.&The&3rd&bullish& Notice&how&this&3Ucandle&pattern&
candle&is&required&to&close&above& comprises&of&a&Doji&followed&by&an&
50%&of&the&bearish&candle’s&body;& Engulfing&Candle.&&&&&
however&I&also&use&the&height&of&the&
overall&pattern&as&extra&
confirmation.&&
& &
&
& & & )
Bullish&Piercing&Line&& Dark&Cloud&Cover&
Traditionally&a&bullish&close&50%&of& The&bearish&equivalent&to&the&bullish&
the&body&of&the&previous&bearish& piercing&line&and&similar&to&‘train&
candle&is&required&and&it&would&be& tracks’&in&bar&charts.&Traditionally&the&
within&a&downtrend&for&it&to&be&taken& bearish&candle&would&have&to&open&
seriously.&The&height&of&the&candles& higher&than&the&bullish&candle&closed& )
(volatility)&defines&if&it&is&a&trading& to&be&a&genuine&pattern.&However&as&
opportunity,&or&merely&a&sign&of& FX&is&less&prone&to&gaps&I&personally&
change&in&sentiment.&& ignore&this&rule.&&
&
&&&&&&&&&&&&&&&&& &
& & & &
Bullish/Bearish&Engulfing&(Outside& Inside&Bar&
Bar)&& Inside&bars&(in&my&opinion)&are&no&
These&provide&excellent&changes&in& reason&to&enter&a&trade&but&merely&
sentiment.&However&they&are&less& highlight&momentum&from&the&
useful&for&entering&an&actual&trade& previous&candle/s&is&waning.&The&size&
due&to&the&size&of&the&bars.&Either& of&the&body&is&not&important&–&here&
& enter&a&trade&on&a&retracement& we&are&looking&for&the&highUlow&to&be&
within&the&engulfing&candle,&or&trade& within&the&range&of&the&previous& &
on&a&smaller&timeframe&in&direction& bar’s&highUlow.&The&closing& &
of&the&engulfing&candle.&& price/colour&dictates&if&they&are& &
bullish&or&bearish,&but&ideally&a&
bullish&inside&day&appears&during&a&
downtrend&(and&visaUversa)&for&any&
real&meaning.&&
&
Again&this&really&is&a&whirlwind&tour&of&patterns,&however&I&assure&you&that&I&only&use&these&ST&patterns&alongside&LT&
patterns.&That&is&all&I&require.&Forget&the&names&–&concentrate&on&what&impact&the&relationship&between&the&highUlow&
and&openUclose&has&on&preciding&candles.&Withthis&information&alone&you&will&create&your&own&patterns&and&meaning&
which&is&more&worthy&than&the&textbook&names&which&you&get&sold&to&you&on&the&street.&
Rejection&Spikes&&
& &
When&you&see&long&wicks&(or&spikes)&they&
can&signify&aggressive&buying&or&selling&at&
a&specific&level,&and&suggests&a&reversal&
away&from&this&level.&&
&
If&these&spikes&appear&around&significant&
levels&of&S/R&then&they&are&deemed&as&
more&reliable.&&
&
If&you&identify&a&trend&with&a&rejection&
spike&which&respects&a&level&of&support&or&
[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 13&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
resistance,&you&have&a&higher&probability&
trading&opportunity.&&

&
&
&
&
&
Lower&timeframes&=&More&signals&false&signals!&(Potentially)&&
& &
Candlestick&patterns,&like&most&forms&of&analysis,&are&
generally&more&reliable&the&higher&the&timeframe&they&
are&seen&on.&&
&
To&the&right&is&the&EURJPY&on&the&5&minute&chart&and&it&
contains&7&reversal&formations,&which&is&one&for&every&
single&price&swing&between&bullish&and&bearish.&&
&
If&you&were&to&enter&after&each&reversal&you&would&
have&lost&money,&or&been&lucky&to&break&even&on&any&
single&trade.&&
&
It&is&also&a&reminder&not&to&use&ST&patterns&in&isolation&
as&you&will&always&be&looking&to&enter&low&probability&
trades.&& &
&
&
Notice&you&are&also&trading&within&a&Bearish&Wedge&Pattern&which&may&have&paid&to&wait&until&price&broke&out&of,&
before&looking&for&a&trading&opportunity.&
&
If&you&see&a&Bullish&Hammer&on&the&Monthly&Chart,&which&rejects&a&level&of&support&and&is&also&in&line&with&a&trend,&
this&is&much&more&reliable&than&the&7&reversal&candles&seen&on&the&5&minute&chart&above!&
&
&
&
! !

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 14&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &
 !
! CHART&PATTERN&TRADING&
!
Technical&Analysis&
!
ST&Patterns:&Summary&&
&
-! Can&be&subjective,&but&easier&to&identify&than&LongUTerm&Patterns&
-! Many&traders&place&too&much&emphasis&on&ShortUTerm&patterns&
-! Provide&more&false&signals&on&lower&timeframes&
-! Must&be&combined&with&other&forms&of&analysis&to&filter&false&signals&
-! Learning&the&names&of&exotically&named&patterns&does&NOT&make&you&a&better&trader&
-! The&LAST&part&of&the&puzzle&&
-! Whilst&they&can&be&seen&at&market&turns,&trend&traders&would&be&wiser&to&trade&reversal&patterns&that&take&
you&back&in&line&with&the&dominant&trend&
&
Focus&on:&
-! Wickes,&Bodies&and&Candle&Range&
-! Relationship&between&these&
-! How&they&integrate&with&preceding&candles&&
-! How&they&integrate&with&other&forms&of&analysis&
&
&
&
REDUCE&YOUR&LEARNING&CURVE&
&
I&hope&you&have&enjoyed&this&series&and&found&it&of&benefit.&Whilst&I&would&like&to&think&you&are&now&expert&analysts&
just&from&reading&this&series,&like&anything&in&life,&it&will&take&time&to&master&which&will&require&practice&and&
experimentation&U&however&a&great&way&of&speeding&up&the&process&is&to&watch&others&perform&analysis.&&

Newsroom& FaceBook& Twitter& & YoutUbe& RSS&

I&would&highly&encourage&you&to&subscribe&to&the&ThinkMarkets&YouTube&channel&and&attend&our&weekly&webinars&as&
they&included&the&methods&used&throughout&the&series.&&
&
&
&
&
&
&

[Link]&&|&&&support@[Link]&&&|&&+44&203&514&2374& 15&
Authorised&and&regulated&by&the&Financial&Conduct&Authority.&
&& &