Key reversal chart patterns and their use in everyday trading
Trend reversal patterns are essential indicators of the trend end and the start of a new movement. They are formed after the price level has reached its maximum value in the current trend. The main feature of trend reversal patterns is that they provide information
both on the possible change in the trend and the probable value of price movement. These patterns serve to indicate that the ongoing trend is about to change the course. A pattern formed during an uptrend signals a trend reversal where the price will head down
soon. On the other hand a reversal chart formed during a downtrend indicates that the price will move up.
Memorizing and learning how to spot these patterns can greatly assist you in your everyday trading experience. These patterns can be effectively used to predict trend reversals and identify areas of potential support and resistance. In addition, they can add to the validity of signals derived from support and resistance and other technical studies as formation of such patterns around areas of support and resistance might give additional confirmation to the underlying strength of said levels. These concepts are explained in this eBook.