The chart pattern is actually an extension of support resistance and trend lines. Because the market generally has ambiguities, here we will talk about the how we should be drawing trend lines or support and resistance. The trend line is simply a diagonal line connecting the low or high points of multiple candlesticks. When we think of drawing a straight line, we think of connecting two points, but in the market, a line cannot be drawn using only two points , because of market ambiguities , two points will result in a fan degree.
Many people do not know whether to use the wick of the candle or the body as a reference when drawing a trend line. When we talked about trend definition, we mentioned that support and resistance are actually an area rather than a precise point. Therefore, when drawing support and resistance, we must wait for the verification of the third point to draw a line. We call the first and second points a fixed point , and we wait for the price to return to a extension of fixed point. After the rebound occurs, the trend line drawn after it is verified, and we can say that this trend line is valid.
After solving the ambiguity of trend lines and support and resistance lines, we can take a look at how the drawing of these trend lines advances into analysis of chart patterns.
Equivalent upwards support trend line + upwards resistance trend line = Upwards Channel
Accelerated rising support line + decelerated rising resistance line = Wedge Pattern
Horizontal support line+ falling resistance trend line = consolidating triangle
Bullish Chart Patterns
Bearish Chart Patterns
Ranging Chart Patterns