The more you practice everything in life, the more you will hone your skills. The purpose of this article is to take you on a journey of understanding how to read charts for the way of money. A chart is a graphical characterization of data. Visualizing multiple sets of data through charts. Charts helps people better understand and remember information by highlighting patterns, trends, relationships, and structure in the data. If we use charts with maps to help us explore data and they tell a story.
Basically in this article we only talk about trading charts. Traders like to follow the predictive powers of charting tools and indicators to identify extreme trends and exchange rates occurring between two financial instruments depicted on the graph to guide when entering and exiting the market.
Trading Chart Pattern for the Way of Money
A trading chart pattern is a set price action that is repeated over and over again. The idea behind chart pattern analysis for supply and demand is that by knowing what happened after a pattern in the past, you can make an educated guess about what might happen when it reappears.
Demand and Supply Zone Charts for the Way of Money
Every market works on supply and demand zones. When the demand is high i.e. buying starts in the market then the price increases, there will be a bullish trend in the market. When the supply is high it means that selling starts in the market, due to which the price decreases and the market moves downwards. Supply and demand activity has occurred, causing the price to increase or decrease dramatically. Read Charts for the Way of Money.
Support and Resistance Zone Charts for the Way of Money
‘Support’ and ‘resistance’ found at two related levels on the price chart that appear to limit the range of market activity. A support level is where the price stops falling regularly and bounce back up, while a resistance level is where the price stops rising regularly and dip back down.
It formed in all time periods in the charts; Daily, Weekly and Monthly. Traders also find support and resistance in every time frame like one minute and five minute charts. But the longer the time period, the more important support or resistance becomes.
Support and Resistance Zone
Open Gap Up and Gap Down Charts for the Way of Money
A gap up occurs when a stock’s opening price is higher than the previous day’s closing price; Gap down occurs when it is lower than the previous day’s closing price. When it is usually due to some exceptionally positive or negative news.
When a Gap Up or Gap Down formed, you wait for the gap filled and then enter for the trade. It formed in every time frame and fills certain gaps and the Gap-up formed with volume an uptrend and traders can enter the trade but think about resistance because when resistance touched there is a chance to change direction.
Open Gap Up and Gap Down
Double Top Charts for the Way of Money
This creates an M-shape on the chart. When a double top pattern formed the market price makes two consecutive highs with small declines in between.
Double Top is a bearish reversal pattern, an upward trending market tries to reach new highs twice. But both times, it bounces back as sellers push the price back down – a sign that the bullish momentum may be ending. The second top will not be as high as the first, as it signals the end of buying pressure.
Double Top
Double Bottom Charts for the Way of Money
This creates a W-shape on the chart. Double Bottom is a bullish reversal pattern that forms when the market price made two attempts to break the support level and failed. This usually marks the end of selling pressure and a shift towards a bullish trend. Therefore, if the market price breaks the resistance level, it is likely to rise.
When a double bottom forms on the charts, it is always advisable to confirm the resistance level before opening your position. Many traders do this by looking at past price movements and using technical indicators.
Double Bottom
Head and Shoulders Charts for the Way of Money
Like the human structure, the head and shoulders pattern is also formed by three heights.
- The central high is the largest formation, which becomes the head of the pattern.
- It is bounded by the two lower points, which form the shoulders.
The head and shoulders is a bearish reversal pattern, all three highs must fall to the same support level–known as the neckline–and while the first two will bounce, the final attempt must break into a downtrend.
Head and Shoulders
Flag Charts
When a market’s support and resistance lines move up or down parallel to each other, they form a flag pattern. This results in a breakout in the opposite direction of the trendline.
- Bullish flag is formed, both lines point downwards and a breakout through resistance signals a new uptrend.
- Bearish flag is formed, both lines point upward and a breakout through support signals a new decline.
While flag patterns thought of as reversal patterns-after all, the price action within the flag reverses when a breakout occurs-flags are usually classified as continuation signals because they signal an uptrend (bullish flags.) indicate. Follow. And occur after downtrends (bearish flags) then read charts for the way of money.
Flag
Triangles Charts
On the chart formed three types of Triangles
- Symmetrical Triangle
- Ascending Triangle
- Descending Triangle
Symmetrical Triangle
The symmetrical triangle chart pattern is a period of consolidation before the price breaks out or moves lower.
Its characteristic is that when a breakout from the lower trend line signals the beginning of a new bearish trend, while a breakout from the upper trend line signals the beginning of a new bullish trend. A series of sequentially connecting trend lines are connected, indicating the beginning of a trend and read charts for the way of money.
Ascending Triangle
This is a breakout pattern that forms when a horizontal set of highs meets an ascending set of lows, with the price breaking the upper horizontal trend line on chart with increasing volume. This is a bullish formation. The upper trendline should be horizontal, representing approximately the same height as the resistance level.
Descending Triangle
A descending triangle refers to a bearish chart pattern and is the opposite of an ascending triangle. It follows a downtrend, and formed when a horizontal set of lower support levels meets a descending set of higher resistance.
