For
the purpose of this lesson, let’s broadly categorize all of our technical
indicators into one of two categories:
- Oscillators
- Trend following or momentum indicators
Momentum indicators are lagging indicators.
While the two can be supportive of each other, they're more likely to conflict with each other. We’re not saying that one or the other should be used exclusively, but you must understand the potential
pitfalls of each.
Pattern Schmatterns
By now
you have an arsenal of weapons to use when you battle the market. In this
lesson you will add yet another weapon: CHART PATTERNS!
Think
of chart patterns as a land mine detector, because once you learn this, you
will be able to spot “explosions” on the charts before they even happen, making
you a lot of money in the process.
In
this lesson, we will teach you basic chart patterns and formations. When
correctly identified, it usually leads to a huge breakout or “explosion” in
this case.
Remember, our whole goal is to spot big
movements before they happen so that we can ride them out and rake in the cash!
Chart formations will greatly help us spot conditions where the market is ready
to break out.
Here's
the list of patterns that we're going to cover:
- Symmetrical Triangles
- Ascending Triangles
- Descending Triangles
- Double Top
- Double Bottom
- Head and Shoulders
- Reverse Head and Shoulders