Hey hey: what's up my friends, so in today's training i want to share with you the three golden rules right when it comes to trading chart patterns. So let's get started number one, the longer it ranges the harder it breaks. So what do i mean by this? So let me explain so: let's say you see two charts right. Let's say this one is in there.

This market is in a range right and let's say this range is about 20 bars, okay from from left to right about 20 bars, and then you notice another market, which is also in the range, but this time around the range is 80 bars. Okay, so you can see that in this case right, this market is ranging for a longer period of time compared to this one over here. So now, given these two choices, which one do you want to trade, the breakout so chances are, you want to be trading? This type of market condition where the range has been in a sustained period period of time. Why is that two reasons for it number one when the market is in a sustained period of range? Okay, what happens is that this highs and lows of the market will be obvious right to more participants in the market traders on the five minutes time frame the one hour time frame the daily timeframe.

They will be aware of this, this boundaries in the market, because the range the market has been ranging for such a long period of time, traders across different time frames. They will pay attention to it and it's more significant number two is this: when the market is in a range for a long period of time, what happens is that a cluster of stock orders right will be built right just beyond the ends of the range. So let me explain so imagine right if someone will to let's say market is at the low of this range and it bounces up higher. Someone goes long because thinking that support will hold so if you are long at support, where will you put your stop loss? Well, chances are you put your stop loss below the low of support somewhere over here, so you can see that market? You know bounce up and down off support number of times right once twice three times four times.

So when many traders spot this right, they will look to buy at support and a lot of them would place their stop loss below the lows of support. So same reason, right at the highest of the range: when traders notice the price bouncing of resistance, resistance, resistance resistance, they go short. Where would they set their stop loss? Chances are above the highs of resistance, so when this goes on for a long period of time right, the cluster of stock orders get built more and more over time and when the price, eventually, let's say it, breaks out and hits this cluster of stock orders. What happens if you think about this right? If someone who is shot this market, okay and if the market hits the stop loss, that is actually a buy order to get out of their short trade.

So this cluster of buy orders right will propel and push the price up higher and that's not all because if a breakout trader who spotless the market breaking out of resistance, he looks to buy as well. This will fuel right, even more momentum to push the price up higher. So this is why the longer it range, the harder it breaks. Okay.

So if you're trading reversal chart patterns like the triple bottom, double top, etc pay attention to this principle, number two reversal patterns can also be trend: continuation patterns. So, for example, you know reversal chart patterns like the inverse head and shoulders pattern right. You know reversal patterns like the double bottom right, but this right doesn't have to only be reversal patterns because they can also be trend continuation patterns. So let me give you an example.

So let's say market is trending up higher. Okay, you might get a inverse head and shoulders pattern like this now. This is bullish right, because this is a sign of strength, because this tells you that the sellers try to take the price down lower right. We have this.

The seller pushed the price lower made. This swing low, then we have another lower low, but then they tried to push the price higher for a third time, but they couldn't even they couldn't exit this low. In fact, the price then bounced up higher right reaching back towards this swing high, this neckline okay. So you can see it over here.

This is an inverse head and shoulders pattern. This tells you right that the sellers tried to drive the price down lower three times right, but the third attempt right was even weaker than a second. So this is a sign of strength, so this means right if the price does break out higher okay, this can be a trend. Continuation pattern, even though right this by right, it's a reversal pattern, but if you take into context right or reading it with the trend right, you realize that this can also be a trend.

Continuation pattern. Does it make sense? Okay, so reversal patterns like the inverse head and shoulders pattern, the triple bottom. You know the double top etcetera. They all can be trend continuation patterns, but the key difference here right between a reversal pattern and trend.

Continuation pattern is that this one here right. The number of bars that it takes to form - usually you can't expect it to be very long - usually about 25 to you know, 40 bars, that's about it right. It won't take like 100 or 150 candles to form, because this is not a reversal pattern. This is a trend, continuation pattern, so usually the number of bars that it takes to form right is usually much less around 25 30 40 bars, okay and finally, the last one is trade in direction of the trend, especially when you're trading trend continuation patterns, like you Know the bull flag, the bare flag, etc trade in the direction of the trend.

The last thing that you want to do is that, let's say the market is in a downtrend, and then you spot a blue flag like this right and you want to trade. A bull flag, let me ask you: is that a high probability trading setup unlikely right, because look at this right look left you're, actually trading against the direction of the trend. So, yes, you have a valid bull flag pattern over here, but you're trading against the long-term trend. So what are all of that working out? If you ask me right, a better approach is to actually trade the trend.

Continuation pattern, like the bull flag pattern in the direction of the trend - so let's say market is in range - goes up. It breaks out uptrend trade, this blue flag pattern right. Do you see the difference now now you're trading in the direction of the trend, not against it? So if you're trading trend continuation patterns, remember you want to trade it in the direction of the trend, not against it. So, let's do a quick recap right number, one, the longer it range the harder it breaks.

This applies to you know, reversal, chart patterns, number two reversal: chart patterns can also be trend, continuation patterns, but they really take uh less time to form. Maybe you know 25. 30 40 bars that's about it and finally, you want to trade in the direction of the trend, especially when you're trading trend continuation patterns, don't trade against the trend and by the way, if you want to learn more about such trading strategies and techniques right, you can Get a copy of this book called price action trading secrets. This is about 140 page uh, full color trading book, where you'll learn more about price action, trading, support resistance, candlestick patterns and much more so i'll, put the link somewhere below this video.

You can check it out right and with that's it. I wish you good luck. Good trading. I will talk to you soon.