Module 4 – Reversal and Continuation Patterns Introduction So far, we have looked at some of the basic theories behind technical analysis and the way prices move on charts; we’ve also discussed support and resistance and how they impact the price; and looked at trendlines and other lines that also can be seen to affect, […]

Internal Trendlines To complete our discussion on lines for the moment, you should know that some analysts develop a good eye for drawing internal trendlines. These are not like regular trendlines, which can be drawn by anyone following the simple rules of connecting the high or low points. Instead, internal trendlines rely on you looking […]

Speedlines Yet another way to draw lines on a chart which may prove to be useful, speedlines is a technique developed by Gould. It uses one-third and two-thirds as ratios again, but in this case the fractions are not applied to the retracement, but to the speed of the trend, that is how fast the […]

Percentage Retracements Time to talk some more about price targets. It’s obviously useful if you have an idea in mind about how far the price is going to go on a retracement before resuming a trend. The retracement is a countertrend movement, which traces back some of the primary trends gains before the primary trend […]

Channel Trading: The Channel Line Drawing two lines upon a chart across past highs and lows can help you decide your next trade. This is another idea that develops out of the trendline concept and is referred to as the channel line, sometimes called the return line. Sometimes you’ll notice that prices keep between two […]

The Trendline Fan To elaborate further on the use of the trendline, sometimes it is possible to draw several trend lines creating the appearance of a fan. When the first trendline has been violated, and in an uptrend has become a resistance, you can draw a second line going from the start of the trend […]

Breaking the Line Nothing lasts for ever, so if you have a valid trendline and the price violates it, breaking through, this can provide the first sign that the trend is changing. Here’s an uptrend where the trendline has been broken –     This is a case where you might consider closing any long […]

Strength of the Line Just as with support and resistance, there are various ways that you can gauge how “strong” the line is, or in other words how likely it is to hold up in the future. Once again, as with support and resistance, if you can trust the line most of the time you […]

Trendlines Now we go back to the idea of drawing an angled line on the chart. There are many different ways of doing this and we cover several in this module. As with all technical analysis, there is no one universal right way that will give you trading success all the time. What follows are […]

The Strength of Support and Resistance You may be wondering to what extent you can trust and expect support and resistance to work. Obviously, if you can trust them to hold firm the majority of the time, say 80% of the time that they are tested, then you can base your trading on the assumption […]