Charts Can Map Sudden Market Moves

2020-05-20 | Simpler Trading Team

Market movement is all over the place lately with traders struggling to determine a consistent direction.

Many traders are finding themselves on the sidelines to avoid the heavy volatility. Sitting safe with cash in the account is a viable strategy.

So what do you do with any extra time when not staring at the digital ticker tape?

Get back to some basics with charts either as a new tool for beginners or a refresher for seasoned traders.

Chart patterns are used to identify whether a trend is likely to continue or a reversal is about to happen. Sound familiar with this up-and-down market?

When you combine indicators with chart patterns there is more opportunity for catching trends.

Charts are powerful because they “pattern” human emotions — fear, greed, worry, hope, joy — that move stock market prices. This map of emotions fuels life and the markets. And, like history, the market repeats itself in cycles just like humans.

These “emotional patterns” lead the markets down a path — either a continuation of the current trend, or an end to the current trend which then switches into a reversal.

Chart patterns don’t form all the time, but when they do they can be powerful at determining market movement.

Traders often hear quick references to many patterns, and the volume of references can get confusing quickly.

Here’s a few you’ll hear about:

  • Triangles
  • Wedges
  • Head and Shoulders
  • Cup and Handle
  • Pennants

Chart patterns can provide clarity when searching for both short- and long-term forecasts when you develop an understanding of what to look for.

Combining indicators with the insight of chart patterns increases the potential for high-probability trades.

This all follows the Simpler Trading method of finding and using the right tools in the best trading opportunities. Chart patterns can be a powerful and consistent source of trade setups — and they can form an important base in every trader’s plan.

We Saw: Market loving more states opening up economies — 

  • Tech, entertainment stocks get boost
  • Fed propping up markets with bond infusion
  • Fed then warning of economic downturn coming

We’re Watching: … pullbacks and bearish sentiment, oh my —

  • Gold with a setup, bonds help gold
  • Will any good restaurants survive in Austin?
  • Pretty flat across the board among our traders

Learn to target precise entries and exits with “divine” tools — take a look at high-probability chart analysis.