Yes, you should be aware of them even if you don’t trade patterns as such. They demonstrate price action, support & resistance levels and simple chart dynamics like trends, and they are useful guides to market participants’ psychology and buying / selling preferences.

Chart patterns is the most interesting thing in the whole technical analysis. Actually, they are more useful than any other tools like indicators or candlestick patterns. They will help you to understand the situation and sometimes even to make relatively accurate assumptions on the upcoming price changes.

You can easily find detailed information on the most popular chart patterns. It would be interesting to save templates and then try to find them on charts. You can also create your own collection of chart patterns – this will give you better understanding of instruments you are trading.

Of course, indicators are important too, but in most of the cases they just provide additional confirmation for the signals provided by chart patterns, and the situation with candlestick patterns is nearly the same.

Another important point is that one can use the same chart patterns at any market, so this approach is very flexible. If you will find some books dedicated to chart patterns in commodities or stocks, you can use them too.

But don’t spend too much time on these things and the different names they have.

Know what a Doji, Shooting Star, or Hammer candle is. Know what a Head and Shoulders is. And otherwise, look for ‘M’ or ‘W’ structure to give signs of reversals and/or continuations. ‘M’ structure is obviously bearish – Highest High – higher low – lower high – lower low, and ‘W’ structure is bullish. Lowest low – Lower high – Higher Low, Higher high.

Know what a pennant is, a descending triangle, and an ascending triangle, and the way that price usually (although not always) breaks from these formations.

Source: BabyPips

 

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