Technical analysts and traders believe
that certain chart patterns and shapes are signals for
profitable trading opportunities. Many professional and amateur
traders claim that they consistently make trading profits
by following those signals. In this chapter we introduce some
types of chart patterns and the corresponding trading strategies,
that, according to our extensive historical tests, give the
trader an advantage.
Figure 18. Triangle Breakout.
This is the famous Triangle
Breakout pattern, a strong buy signal. In the past
two months the price shown has consolidated with declining
amplitude and volume. At present, it breaks out with high
volume, signaling a possible new up trend.
Figure 19. A typical Triangle Breakdown pattern –a strong sell signal.