Getting Started in Chart Patterns
Thomas N. Bulkowski
Format: PDF / Kindle (mobi) / ePub
Your plain-English guide to understanding and using technical chart patterns
Chart pattern analysis is not only one of the most important investing tools, but also one of the most popular. Filled with expert insights and practical advice from one of the best in the business, Getting Started in Chart Patterns, Second Edition helps new and seasoned traders alike profit by tracking and identifying specific chart patterns.
Substantially revised and expanded, this new edition stay true to the original, with author Thomas Bulkowski's frank discussion of how trading behavior can affect the bottom line. Interwoven throughout the technical presentations are fascinating anecdotes drawn from the author's quarter-century as a professional trader that vividly demonstrate how one of the best in the business leverages the power of chart patterns.
- Includes additional charts for ETFs and mutual funds
- Introduces more than 40 key chart formations, as well as trading tactics that can be used in conjunction with them
- Supplies actual trades, with their corresponding dollar amounts
If you're looking to gain a better understanding of this discipline, look no further than the Second Edition of Getting Started in Chart Patterns.
pattern begins. For flags and pennants, the peak (swing high) or valley (swing low) closest to the start of the trend leading to the flag or pennant is used (not a 20% trend change). How far will price rise? Find the lowest valley in the two months before the pattern and measure the rise during that time to the top of the HTF. For the stock shown in Figure 6.1, let’s use the January HTF, the highest one on the chart. The lowest valley within the last two months begins at the trend start in
Fortunately, triangles are easy to spot, but here are a few guidelines to make the job easier: • Look for two price trends, the valleys align horizontally or nearly so, and the peaks slope downward. Both trends should follow trendlines connecting them. • Prices must touch each trendline at least twice. • Prices must cross the pattern from side to side, filling the pattern with price movement, not white space. Do not cut off a rounding turn and call it a descending triangle. The inset to Figure
trend channel bottom three days ago after hovering there for a while. Although I am late off the channel bottom in buying the stock, I trust it will continue rising. I did not buy earlier because general market conditions were horrible (general downturn), and I believed that the stock would continue down. 150 COMMON PATTERNS FOR THE TOOLBOX When it turned around, I bought. With its 30% annual growth rate in new stores and other fundamental factors, this stock could be a good holding for the
would identify a pattern too late to trade and other times I would find it well ahead of the breakout. But I didn’t trade the pattern. I just watched it form and watched price take off. I did two things to fix this. First, I programmed my computer to recognize chart patterns before the breakout. That way, I can analyze price behavior and plan the trade. Second, when I get a buy signal, I don’t ask if I should trade the stock. I ask what is preventing me from taking a position. The number of
inverted scallop.” Sometimes traders get excited about a stock and push prices up (or down) at faster and faster rates. The price trend moves up at a good clip (30 to 45 degrees) and then starts curving upward in a parabolic arc. These vertical climbs can be both exciting and scary because prices move higher than you expect, but you know that the rise is going to stop eventually. Then, everyone races for the exits, forcing prices to plummet. When price closes below a rising but curved trendline,