Basic Chart Patterns

My first post is to discuss about some of the basic chart patterns.Chart Patterns are graphical representations of historical stock prices which help to determine current supply and demand forces in a stock. Chart pattern analysis allows a trader to determine with more accuracy just what the current supply and demand is in a stock. Chart patterns are graphical representations of historical stock prices which form repeating patterns or shapes, and are commonly used in the stock market. These patterns can also apply on forex trading effectively.

Trading with technical analysis requires correctly identifying chart patterns. Technical analysis is the study of price history to determine future trading opportunities. Price history in the form of a price chart is the visual representation of where prices have been, where buyers and sellers lurk, and often times the trading psychology at work in the market. If human emotion drives buying and selling behavior, then chart patterns can help to determine where such emotions may next surface. Chart patterns are the depiction of trading psychology in motion.

Chart pattern analysis can be used to make short-term or long-term forecasts. The data can be intraday, daily, weekly or monthly and the patterns can be as short as one day or as long as many years.