These insights are combined with other forms of technical analysis, such as technical indicators or candlestick patterns, to make trading decisions.Īt the core, most chart patterns are built using trend lines that connect a series of highs or lows. While these price movements may appear random at first glance, traders look for a series of patterns to assess market sentiment. What Are Chart Patterns?Ĭhart patterns are simply patterns in prices that appear on a chart. Let's take a look at the five most popular chart patterns, how you can use them and best practices to keep in mind. The subjective nature of chart patterns makes them a bit more difficult for active traders to master. While technical indicators analyze momentum with statistics, chart patterns assess a market’s psychology through its price action. Most traders use a combination of technical indicators and chart patterns when looking for opportunities.
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