Pattern recognition is a branch of technical analysis that focuses on finding price and volume patterns. Experienced traders often consider patterns when calculating where to enter and set stop-loss orders and profit targets for their trades.
In this free ebook you'll learn to:
Pattern recognition involves looking for patterns that appear in the price of traded instruments and can be applied to a range of financial markets such as shares, indices and forex.
Formations such as triangles, rectangles and diamonds track changes in support and resistance and can be used by day traders, swing traders and longer-term position traders alike to track timeframes ranging from five minutes to weekly charts.
Price patterns look at the interaction between supply and demand and when these patterns form, they can help traders to establish the direction of a market’s price and where it may be prudent to close or open a position.