Technical analysis always looks too complicated to novice traders. Sometimes they spend thousands of dollars to sign up for courses that teach technical analysis, and they learn nothing but a bunch of names an terms that make them even more confused: Head and Shoulders, Triangles, Pennants, Flags, Butterfly and Bat Pattern, etc. Read this article to the end to see how simple the solution is. Also, watch this video and don’t forget to Subscribe to Our YouTube Channel. It is a big help to make you a consistently profitable trader.
In this article and also this video, I have mainly talked about an important and almost the most famous chart pattern which is called Head and Shoulders. If you don’t know what this pattern is exactly, please read this article because it explains about this pattern in more detail: Head and Shoulders Pattern Explained in Details
I have also talked about another pattern which is called Saucer and Handle or Cup and Handle Pattern: Cup and Handle Pattern
However, we currently have some exceptional forms of Head and Shoulders and Cup and Handle patterns on some of the markets. This means that chart patterns in technical analysis are not always the same and you should always expect to see something different on the charts. Markets don’t care about forming typical forms of chart patterns. They move based on their own rules: Supply and Demand
For example, on the below chart, you see a forming Inverted Head and Shoulders that its second shoulder hasn’t been formed yet, but it seems the market is going down to form the second shoulder as well:
All you need to know is to locate the support and resistance lines and levels. If you can do this, which is a lot easier than locating chart patterns like Head and Shoulders and Cup and Handle that sometimes the inverted or deformed types of them form on the charts, locating the trade setups will be much easier for you, because you will only need to wait for support/resistance breakouts. You can also combine this with Candlesticks Patterns:
- Candlestick Trading – The Language of Japanese Candlesticks
- Good Examples of the Strong Candlestick Patterns
- Bearish Engulfing Candlestick Pattern As a Strong Sell Signal
- Piercing Line Pattern: A Strong Candlestick Buy Signal
And also the other patterns like Bollinger Bands Squeeze: Bollinger Bands Squeeze Trading Strategy
If you do so, treading will be a lot easier.
Therefore, in case of GBP/USD and what it has formed on the weekly chart (the above chart), all we need to do is waiting for a short trade setup to form on the weekly time frame and below the downtrend resistance line. This short trade setup can be a strong Bearish Engulfing Pattern:
Click Here to watch my analysis video of the above chart. Please like the video 🙂
And, this is EUR/USD monthly chart. On the chart below, I am showing you a pattern that maybe you had never noted on that chart before. As you see, all the current market movements, the way it moved down and what it currently is doing is all because of the pattern’s support breakout that I have marked on the chart below. Maybe, the chart pattern that I have marked with green lines has no name. But it doesn’t matter. Maybe some traders will find some names for it. I see that traders sometimes discuss about the name of a chart pattern or candlestick for several hours. But does the name matter??? Absolutely not.
You just need to know what to wait for on the charts. Like on the below chart, it doesn’t matter what the pattern’s name is. You could only locate the support line that I have plotted on chart, and then take a short position after the breakout:
Like currently, EUR/USD is going up to test another line which is the downtrend resistance line.
Click Here to watch the video of this part that starts from 05:59. Please like the video… it is a big help 🙂
As long as EUR/USD is testing the resistance line on the monthly chart, we can’t do anything, because the market also doesn’t know where to go. Sometimes goes up to test again, but then it goes down, because the resistance is strong and doesn’t allow the price to break above. As a result, you see that the market moves sideways and on the shorter time frames:
You can see the result of testing of the above resistance line on the daily time frame now:
Click Here to watch the video of this part that starts from 07:54. Please like the video 🙂
Resistance breakout and retesting of the broken resistance on NZD/USD weekly chart:
Strong long trade setup on the monthly time frame; Bollinger Middle Band working as a support; and, 0.75565 resistance level which is about 1000 pips above the current market price:
Click Here to watch the video of this part that starts from 09:48. Please like the video 🙂
Gold’s price movements are always so interesting to watch.
Resistance level breakout and retesting of the broken resistance level on the monthly chart:
The same resistance breakout and retesting on the weekly chart:
Saucer Pattern or Cup Pattern on the weekly chart… Watch this part of the video to learn more about the below pattern: