Chart Patterns Notes

• Patterns indicate the psychology and behaviour of a market whether its trending,consolidating or reversing. Various technical patterns mostly occurred far more frequently than they would have done if they were truly random events. In general,the charts contained useful information about future prices.
• Chart Patterns are Predictive.
• However, identifying Chart Patterns that “work” 100% of the time is difficult (or impossible).
• Rules are needed to assess and trade the opportunities.
• Patterns are morely Art than A Science. The traditional patterns used in technical analysis were, of necessity, fairly crude, determined by what was readily visible to the eye. As a result, technical analysis has always been more of an art than a science.”
• Ambiguity in Chart Pattern Recognition is universal!
• Breaks creates Panic
• Consolidations are the most powerful pattern.Each consolidation will typically imply a move of equal distance from the last significant low or high
• Dont try to create patterns. Wait until clearly formed.
• Better Risk/ Reward can be obtained by trading the Breakout only. Assess the Target and
  initial Stop values. Trade those patterns with a Reward:RiskRatio of at least 2:1and preferably 3:1.
• Failure Patterns gives more breakout that succesful ones. Consolidations usually break in the direction of prior trend but can also reverse in the opposite direction.Such “failed” consolidations can prove highly profitable
• Only trade those Patterns which have a clear size reference in the timeframe. Stay Focus in 1 Time Frame that you recognize or indicate those patterns.
• There is no single pattern which is a Holygrail