Hey hey: what's up my friends, so i'm excited about today's training because it's going to be a chart patterns trading course for beginners right. So this is for you, if you do, have no idea about how to read analyze right or make sense out of chart patterns, because i'm going to teach you how to read analyze and profit from chat patterns. Even if you have no trading experience. So here's the breakdown of what we'll cover today number one we'll talk about reversal, chart patterns.

What are they how it works right now, i'll share with you. The most common reversal chart patterns that you'll likely encounter in your trading. So we'll walk you through with a ton of chance an example. So things are crystal clear for you.

So after reversal chapters, we will talk about continuation, chart patterns right and how you can actually spot it right and again, the most common ones. That will uh be important right for your own trading, then moving on right, we can talk about how to actually trade. These chart patterns with, first and foremost, we'll talk about how to trade reversal chart patterns. We talk about the entries, the exits, the strategies right and much more, and then we talk about how to trade continuation chart patterns, because different market conditions would favor different types of market, rather different type of chart patterns to trade.

So we'll break it down step by step right. So all this becomes crystal clear. So does it make sense right excited? Let's get started, okay, the first one up on the list, mr double top right. So here's what a double top is.

So it's a boo! Sorry, a bearish reversal chart pattern right. You will notice two rejection of higher prices and the price is likely to go down lower if it breaks below the neckline. I know that sounds quite a mouthful, so let me explain what this means. So a double top right looks something like this right.

The price heads up higher get rejected, come down, lower, goes up again, re-test the highs or almost near the highs gets rejected once again. So at this point you can see that the price got rejected twice. Rejection of higher prices one time to time at this point, you can also draw this area of support. What a technical analysis people call the neckline and when the price breaks right, when it breaks and close below the neckline there's a possibility right.

The market could continue down lower, and this is what we call the double top is confirmed and the market could possibly head down lower. So here's how it looks like when you look at your charts, alright, so again, price hit up higher test at once. Come down lower heads up a second time test at the second time, come down lower into this neckline and then the price breaks below. So at this point we can see that the double top is confirmed and by the way, just because a chart pattern is confirmed.

Doesn't mean that it will confirm right, go down lower and you know uh continue installation, because it could also be a false breakup, but we use the term confirm. I have no idea why no technical analysis like to use that word, but basically we would say that the chart pattern is completed at a point in time and it's a possibility in this case of a double top. It could go down lower okay, so the inverse of a double top is a double bottom, so i'll go through faster, since this is just the inverse. A double bottom is a bullish reversal, chart pattern, two rejection of lower prices and the price is likely to go higher if it breaks above the neckline and a double bottom looks something like this: right comes down.

Bounce up higher comes back down bounds up higher. Then it goes up higher. This is the neckline, and if the price breaks above the neckline, we would say that the double bottom chart pattern is completed and there's a good chance. This market could continue higher from it and, of course, this is how it looks like on the chart pattern perspective, so we can test it once bounce up higher come back a second time bounce higher.

This is the neckline. So when it breaks above it we can see, we can see that the double bottom chart pattern is completed, and one thing to point out is that if you notice right on this chart, my double bottom right - this one didn't exactly re-test this first lows over here And one thing about chart pattern to bear in mind is that, yes, the textbook example usually shows double top double bottom retests, the highs and lows exactly, but when you encounter it in the real world of trading, sometimes it could not re-test the like. In this case the previous lower, and then it continues up higher. Sometimes it could retrace down a little bit deeper, taking out the lows of this first uh bottom, this low and then continue up higher.

That could be possible as well. So you are, you must be prepared right for all these little nuances and variations right when you encounter it in the real world of trading and also you might be thinking ah right now, you know double bottom double top simple to trade right, so all i need To do is to wait for the price to break out of the neckline and buy and boom profit. Well, not so fast. My young padawan, because there are other things that we look for right where we trade chart patterns, which i will tell you more in the later part of this video, but for now i just want you to familiarize with the basics of the reversal chart pattern understand What it looks like how it works right and later on we'll talk about the strategies and techniques and how to actually trade.

This chart patterns. Okay, the next one on the list is the head and shoulders chart pattern, and this is again another type of reversal chart pattern. Bearish reversal chart pattern, and one thing to talk about is that when you are dealing with, let's say reversal, chart patterns, there are different variations to it. So what i'm sharing with you right now is the different variations of reversal.

Chart pattern. So it's like, for example, you like asian girls right, not all asian girls, look the same, some might have longer hair shorter hair. Some are slimmer, some are curvier, some have larger assets, some are smaller assets, you know they're all asian, but different variations to it and same thing for chart patterns. So this head and shoulders pattern.

It's a bearish reversal chart pattern as well, but another variation right to what you've seen earlier. So this one has a three rejection of higher prices right. Three rejections of higher prices: uh the price again, is likely to go down lower if it breaks below the neckline and here's how it looks like. So this is how the head and shoulders pattern looks like price heads up higher right.

You can see that it makes a pullback, then it breaks out higher again. So at this point right, you can see that the buyers are clearly in control right. They have took out the previous site, but then the sellers step in and push the price down lower. Once again, so the buyers again try to push the price up higher, try to break above these highs, but it just couldn't before the sellers come in and push the price down lower.

So at this point you have what we call this. You can call it an area of support or neckline, and some technical analysts would collect to call it right. And when the price breaks below this neckline, we will say that the head and shoulders chart pattern is completed and the price could possibly hit down lower from here. Okay, and if you look at the chart, this is how it looks like so.

You can see that on this chart. This is what we call the left shoulder. This is the head and the right shoulder in case you're wondering why is this called a head and shoulders pattern? Because if you look at this, it looks like a person right. This is the person's head.

This is left shoulder. This is the right shoulder, and so this is why we call this a head and shoulders chart pattern. So again, the story is the same. At this point you can see.

Price hits up higher, makes a pullback heads up higher breaking above this highs here, still bullish price. The head is down lower the buyers. Try to push the price up higher, try to take out those highs, couldn't find a strength before the sellers took, control come down lower and when it breaks below the neckline. We'll say that the chart pattern here is completed and there's a good chance.

The market could come down lower and you will notice that when you are talking about trading right or patterns or whatsoever, we always use the term probability could lightly. We never use confirm, guarantee plus chop because it doesn't work that way, because what could possibly happen in this case, let's say in this chart example: price breaks down this neckline, then the next one two candles quickly reverse back up again forming a false breakout. That could happen as well. Okay, so so i'll talk again later how to actually you know how we trade chart patterns, how we stack the odds in our favor, but bear this in mind.

Nothing is 100 in trading and moving on the inverse of this head and shoulders pattern is called the inverse head and shoulders pattern. Okay, so again the meaning is just the opposite. It's a bullish, reversal, char pattern. It has three rejections of lower prices and the price is likely to go higher if it breaks above the neckline.

So it looks something like this, so it's just the opposite right of the head and shoulders pattern, so the price hits down lower. That makes a pullback. Okay, then continues down lower sellers are in control, taking out the previous low, then the buyer stepped in push the price higher before the sellers come back and try to push down for a third time, see tested once twice for a third time before the buyers stepped In and pushed the price up higher, so this point is where we can demarcate the neckline before the buyers if they break above this neckline. Okay, we will say that the inverse head and shoulders chart pattern is completed and there's a good chance.

This market could go up higher, so chart wise. It looks something like this okay, so you can see again tested the lows three times tested once twice and tries, and you can see that this chart method. It did not test the lows at the exact level for all three times. In fact, it's all like kind of different price point.

One is first level tested here second one over here and then third rejection of price is over here so again, uh different variation right of the reversal chart patterns, and then this over here is the neckline and when the price breaks out of it, okay oops, when It breaks out of it. We will say that this inverse head and shoulders chart pattern is completed and the price could possibly heat up higher and also just another bonus one right. So i didn't edit. I didn't add this, but another variation is what we call the triple bottom or triple top.

So in this case, since it's the inverse, let's talk about triple bottom like this, so okay, this is the triple bottom. Okay, you can see that price tested once two times and three times so this is again a bullish reversal. Chart pattern: another variation of the inverse head and shoulders pattern, but i didn't edit to the slice because again there's no point: cramming you all these different chart patterns and stuff right, but because, once you understand the basics, all this uh kind of like secondary you you'll Know right when the time comes, so i'm rather equip you with the basics foundational principles and then, when you go on to trade, the markets right, whatever pattern the market throw at you, you can pretty much figure it out on your own. Does it make sense great and if you've enjoyed, if you're, enjoying this training video so far smash the thumbs up button, if not hit subscribe? Okay, so the next one on the list is what we call the descending triangle: here's what it means.

It's a bearish reversal chart pattern right, a series of lower highs coming into support, or we can call this a neckline if you wish, and the price is again likely to go down lower if it breaks below support. So let me show you how this one looks like, so you can see, price hits up, higher comes lower, higher comes down, lower, higher, comes down, lower, come heads, up, higher, comes down, lower higher and then lower, and then this is the neckline that you can draw. So you can see that the story behind this chart pattern is that you notice a series of lower highs, lower highs, lower highs, lower highs. This tells you that the selling pressure right is strong in the background.

So this is why the buyers they have difficulty even retesting, the previous high. So at this point you can see the price couldn't even re-test this previous high over here at this point, couldn't even re-test this previous high, because this selling pressure is constantly putting strong selling pressure right in this market. So again, you'll notice a series of lower highs. Coming into support - and you can imagine this like a like the uh pressure cooker - it's like you know - this market is consolidating right.

Volatility - is shrinking and storing potential energy to make the next move boom right lower in this case. So here's how it looks like on the charts, so you can see that this this chart pattern. This is the neckline or support if you want to call it notice, the series of lower high lower high lower high lower high lower high coming to this area of support notice the range of the candles right compared to the ones over here and with the ones Over here notice, the range of the candles have gotten smaller considerably, so you can see that volatility has strength right, storing potential energy to make the next wave in this case lower right when the price breaks below this area of support. So this is the descending triangle and of course, the opposite of this is not called inverse triangle, but the ascending triangle - okay, so it's a bullish reversal, chart pattern a series of higher lows into resistance.

This is what it looks like, and the price is again likely to go up higher if it breaks above resistance. So just to illustrate ascending triangle goes up, price goes up, higher makes it pull back, goes up higher oops, i overshot this one. So let me just redraw that so price goes up, higher makes a pullback goes up, higher makes a pullback goes up, higher makes a pullback goes up, higher makes a pullback goes up higher and then over here you can draw the area of resistance and notice the Highs right, higher low a rather distributed higher low higher low high yeah low okay. So if you look from left to right, this is showing you know buying pressure stepping in supporting right this higher prices.

You can imagine right that the buyers they're willing to buy at this higher prices higher prices higher prices they they think that there's a good chance, this market could break out. So this is why buyers are willing to support this higher prices and, if you look at the range of the candle again, it usually will get tighter and tighter compared to this range of candles at this portion here, okay, and if the price breaks out of resistance, There's a good chance: this market could continue higher so just to share with you a chart example pay attention again right the range of the candles here, how nice and tight it is all right. I, like this type of chart patterns to trade, because the tighter the range of the candles right likelihood right the stronger id, the breakout right. That will happen.

So this range of the candles is pretty tight compared to the ones over here, which is so much wider right where volatility is much higher, so over here volatility here is much lower. Okay. So again, this is how a ascending triangle pattern looks like higher low higher low higher low high low to the point where the market cannot fake it anymore. Then it breaks out right higher okay.

So, in this case, of course, all these chart patterns that i've shared with you they're all cherry picked, but in the real world right it could go in the opposite direction as well, and that's what we call a false breakout, okay time for a quick quiz right. What do these reversal chart patterns have in common? Oh, i know rainer all these reversal patterns. Do you have the word chart patterns on them smack your face? No, of course not right. That's not the answer.

I'm looking for even though you're not quite wrong. What they have in common is this right is that the chat pattern is only completed when the price breaks the neckline, so most reversal chart patterns. They have this attribute where their pattern is only completed when the price breaks the neckline. So whether you're dealing with let's say, for example, the double talk, oops wrong tool, double top the head and shoulders pattern.

The descending triangle pattern right. There all are defined by their neckline, neckline and neckline. So in future, if you come across any reversal, chart pattern or chart pattern, they're not sure, but you cannot repeat, but you see that there's a neckline, that's defining it chances. Are it's a reversal reversal, chart pattern and you'll be completed right when the price breaks out of the neckline okay, so make sense good.

Let's do a super quick recap right. So here's what you've learned today, the double top chart - pattern, double bottom head and shoulders inverse head and shoulders descending triangle and ascending triangle. I know i'm just reading from the slide. So let me just give you a quick overview of what a quick recap right.

Double top looks something like this price tested highs once and twice double bottom. Is the price tested lows once and twice head and shoulders pattern right, looks like this. This is the left shoulder the head, the right shoulder inverse head and shoulders is just the opposite. Left shoulder hit right, shoulder descending triangle looks like this: a series of lower highs into support.

Okay, and if the price breaks below support, that's a good chance, it could continue. Lower ascending triangle is just the opposite right: a series of higher lows into resistance breaks above it there's a good chance. It could continue higher make sense great. Then, let's move on now moving on.

Let's talk about trend continuation chart patterns and the first one on the list is the bear flat pattern. So what is this? So? Let me explain so a bear flag is essentially a bearish trend. Continuation chart pattern, it's a minor pullback in a downtrend and if you notice the candles, the range of it is usually having a smaller range which i'll share with you shortly, and the price is likely to go down lower if it breaks below the low. So let me just show you how this bare flag looks like so we have an existing downtrend market makes a pullback like this okay and this portion here.

If you pay attention to the range in this bare flag over here, the range of the candles are usually smaller right compared to, let's say the range at this portion of the trend. Okay, and if the price breaks down lower of this low, there's a good chance. This trend will continue, so this is why we call it a bare flag because it kind of like looked like a flag. You know waving up and down just that now it's inverted it's a bad flag.

So here's an example of how a bare flag looks like so you can see over here we have the existing downtrend, that's key! Then we have this bare flag pattern notice. The range of these candles, usually right, not always, but usually the range of those candles - are relatively small right - the pullback and when the price, for example, breaks below this low right this low of this flag, there's a good chance. This market could continue lower. So that's what we call a bare flag pattern and, of course the inverse is true right.

It's what we call the blue flag. This is pretty much a bullish trend. Continuation chart pattern right, it's a minor pullback in an uptrend and the price is likely to go higher if it breaks above the high of the flat. So here's how it looks like again trend existing trend price makes a pullback.

This is what we call a bull flight pattern right, so when the price breaks above this high, the height of this bull, flag pattern, chances are, the trend will continue higher so again a chart example. This is how it looks like so again: existing trend, a pullback when the price breaks out of the flag when he picks up this high there's a good chance. It could continue higher. Okay.

The next chart pattern on the list is what we call a rectangle. This can be a bullish, rectangle or a bearish rectangle, depending on the direction of the trend, but for this uh example, i'm just going to call this a rectangle right, so it can mean uh, it's a trend, continuation chart pattern and it can be a bullish, rectangle Or a bearish rectangle, so in this case right again trend continuation chart pattern right: it's a range in a an existing trend. So this is how a rectangle looks like i'll share with you shortly and the price is likely to go in the direction of the trend. So, for example, let's say we are in an uptrend okay in an uptrend and a price forms this rectangle over here.

Okay, like this, so chances are right pattern. This little line down right chances are. When you see this rectangle in an uptrend chances. Are this market? Will continue higher in the direction of the trend? Of course, the inverse is true.

If you identify a rectangle in the downtrend chances, are the rectangle will break down lower? So let me share with you how it looks like on the chart so over here. You can see this is a rectangle, a bearish trend, continuation rectangle, you can see existing downtrend price forms this rectangle over here when it breaks down below the lows. The trend continues down lower another example this one here we have an uptrend on uh amd uptrend. Then the market goes into this rectangle.

This range over here when the price breaks out of the highs. This uptrend continues higher so often right when you see rectangle on your chart all right and you have no idea which direction it's going to break out. Just look at the existing trend: if it's an uptrend chances are, it will break out higher if it's in a downtrend chances? Are your breakdown lower, no guarantee, of course right because we're all dealing with probabilities? Never certainty, i think that's a quote from martin j pring, which i've come across some time back. Next, one reversal chart patterns can also be continuation.

Chart patterns. What do i mean by this? So this is important right. So follow me with this. So if you recall right earlier, you studied reversal chart patterns like the head and shoulders double bottom double top ascending triangle, et cetera, all right and these patterns right.

They can also be continuation chart patterns if you think about this right. So let's say you see this uptrend over here and then what you have is this inverse head and shoulders pattern? What is the message telling you? Let me just draw the neckline to complete it. So think about this, what is the message trying to tell you? Well first thing is you know you have an uptrend. That's first second thing is that you notice the sellers try to push the price down lower three times right once over here, two times and third time.

That's all you have. This left shoulder left shoulder head and right shoulder and after three attempts lower. This market still cannot go down low and if the price were to break out of this neckline, what does it mean? Well, if you think about it, you review understand a story. Chances are this market is likely to go up higher.

So this is what i mean by you know. Reversal, chart patterns can also be continuation. Chart patterns right because this inverse head and shoulders pattern is technically a bullish chart pattern. Now you have a bullish chart pattern.

A bullish reversal chart pattern in an existing trend. I would say it's even more powerful because the odds are like kind of like stacking. Your favor, of course, this is just one example. It can also be like an ascending triangle, so let's say you have an uptrend, and then you see this ascending triangle over here.

Okay and then this is again the neckline over here again this ascending triangle. It can be a trend continuation chart pattern because it tells you that number one you are having an existing trend series of higher highs and higher lows. Then you notice the buyers they're willing to buy these higher prices, higher prices, higher prices, higher prices smack into resistance. So this tells you that if the market breaks out of resistance chances are those potential energy that was stored right, it's gon na be released right and the market could possibly head up higher.

So this is what i mean by you know: reversal chart patterns. They can also be continuation chart patterns, so it's the inverse right. So same thing, if you notice a downtrend okay, you could possibly get something like a descending triangle. Chart pattern: okay like this, and if the price breaks below it chances are, the market will continue down lower.

So here are a few chart. Examples to show you what i mean so look at this right. This we have this uptrend. Then we form this ascending triangle.

Chart pattern: okay, so ascending triangle: chart pattern is kind of like flexible. It can be a reversal chart pattern, reversing the existing downtrend or it could be a trend. Continuation chart pattern. Of course, there will be a difference here right, and the main difference here is that, if you look at ascending triangle, chart pattern as a continuation chart pattern.

The duration of this pattern is usually shorter compared to it being a reversal. Chart pattern so i'll explain that more later, but the duration of the pattern that it takes to form right the time it takes to form this pattern is usually shorter, because it's a trend, continuation pattern right and when the trend is uh likely to continue higher the Pattern won't take too long to form right before it breaks out and continue higher. Okay. Here's another example that i found right.

You can see over here. We have this existing downtrend and then this descending triangle in this downtrend, a series of lower highs, lower highs, lower highs, then price coming into this area of support, then clearly, you can see that, since the trend is down lower, this descending triangle can be a trend. Continuation chart pattern so when the price breaks below support, there's a good chance, it could continue down lower okay, so so moving on right. What do continuation chart patterns have in common and answer is very simple: they all have an existing trend right in all these patterns.

So, let's do a quick recap: shall we so what we've just learned is number one. The bare flag, the blue flag, rectangle and reversal chart patterns can also be continuation. Chart patterns. So a quick recap.

A bear flight looks something like this. This is a bear flag. Like this, a bull flag is the inverse like this. Okay, there's the bull flag, the price breaks out, there's a good chance.

It could continue higher this one. If the price breaks down lower, there's a good chance, it could continue down lower a rectangle is just essentially a range in an existing trend like this, a rectangle right and chances are it will, you know, break out in the direction of the trend, and then you Also, learn, importantly right reversal. Chart patterns can also be continuation chart patterns. The main difference is that, if a reversal chart pattern is to serve as a continuation chart pattern, the duration right that the pattern takes to form is usually shorter right compared to it.

Acting as a reversal chart pattern: okay, we'll talk more about that. In the later part of this video - hey, hey, what's up my friends so now the question is: how do you trade reversal, chart pattern so yeah before i forget, if you are interested to learn more about price action trading, because it strongly complements our chart patterns, which Is a training you're watching now you can actually get a copy of this book called price action trading secrets, so it's 142 page full color trading book which will strongly complement what you're learning now, because we talk things like candlestick patterns, support resistance trading strategies, risk management And much more so yeah this book over here i put the link somewhere below this video. You can get a copy and i'll ship it to anywhere around in the world, except a few countries due to a logistical issue. So again, i'll put a link somewhere below this video.

You can check it out and moving on. How do you trade reversal chart patterns here are a few things that i look for number one. It has to be at least 80 candles, which i'll explain why shortly the first setup, then i look for, is what i call the break up with a build up. Second setup is a break and re-test, and the third setup is the first pullback right and you'll see why we have multiple trading setups when we are trading.

This reversal chart pattern so why at least 80 candles? So if you recall right a reversal, chart pattern can also be a trend. Continuation pattern. So, what's like the main difference between them. Well, the main difference is that reversal chart pattern.

They usually take a longer time to form. Why? Because a reversal chart pattern is trying to reverse the earlier move. So let me give an example. So let's say we have this existing downtrend over here, okay and then we have this, let's say: inverse head and shoulders pattern all right.

We are trying to reverse right. This entire down move, if you, if you see this inverse head and shoulders pattern, if you ask me right, do you have much conviction behind it? Personally me, i would say no because if you look at the duration of this pattern, it takes to form compared to this trend. Let's say this trend takes like 100 candles of price. You know consistently going down low over time and then this inverse head and shoulders takes like, i would say, 30 candles to form this all right, i would say the odds of this pattern.

Working out is quite slim, because the overall trend is still intact and chances are. This market will break down towards the downside, so why you want to look for at least 80 candles is because it gives you enough time right for the pattern to perform and to become more significant. So it's kind of like a, i would say, a ratio kind of thing. So if let's say this, downtrend takes like 100 candles to form and your inverse head and shoulders pattern also take something like a 80 or 100 candles to form right now.

Do you see the difference now now at this point right this inverse head and shoulder planet? It's more significant. It has now attracted the attention of more traders because they look at this. This now seems that this downtrend is not quite going down any longer. This kind of looked like a range, and this could be a potential reversal, because this is a potential inverse head and shoulders pattern, and also this level now will be more significant from traders on the lower timeframe and traders on a higher timeframe, because it as it Takes more time to form right there that support resistance.

That area becomes more obvious and traders right momentum, traders, breakout traders when they see these right. If the price breaks out right, they look to get on board right the start of this new potential uptrend. So this is why, if you give it at least 80 candles to form right, this is kind of like a bit of a subjectivity. I just came up with 80 candles because that's my own personal take my own preference.

If you want to adjust it to 1900 based on your own back, testing results feel free to do so, but i go with at least 80 candles, so this kind of give the market right enough time right to digest this recent down, move right and also give Enough time for our traders on the higher timeframe, the lower timeframe to notice that hey a new market structure is forming. This could potentially be the bottom right. This could potentially be the bottom, and if the price breaks above this neckline, this could be the start of a new uptrend. So this is why we want to give it more time right for the market to kind of like digest right.

This recent down move - and you know, bring more attention to traders from different time frames, so at least 80 candles. Then, once you have that right, the first potential setup you can look for is what i call a breakout with a build up. So it looks like this right you're pretty much waiting for a build up or consolidation to form before the neckline. So let me just give you an example.

So let's say this is the inverse head and shoulders pattern right. What you're looking for is for the market to consolidate right here just before the neckline right and then to buy the breakout of it okay. So this is what we call a breakup with a build up, so this portion here is what we call a build up. This is a tight consolidation.

Second potential setup is uh okay, so this is very simple right. You can just enter when the price breaks out of the build up. The second setup is what we call a break and re-test so sometimes right. The market could be very fast.

It could just break out like this okay. So let's say this is again: the neckline and the market quickly breaks up without any build up, so what you're looking for is for a break out and then a re-test of this previous resistance resistance, which could become support and one way to kind of time. Your entry is that you can use a tool, like you know, a reversal candlestick pattern like, for example, a hammer like this okay, when this forms right, you can look to enter on the next candle open. Your stops can go a distance below this lows, all right possible target.

You know before this swing high that could be possible as well. So that's one way to trade, the break and re-test okay. So basically, the price broke out of the neckline and re-tested and you're waiting for a reversal. Candlestick pattern to time your entry i'll share with you some charts later on, and the third and final setup is what i call the first pullback, because sometimes what could happen is also.

Let's say this is the inverse head and shoulders pattern? Okay, again drawing like so many times and then the market breaks out right, there's no build up just breaks out, but it doesn't come back and re-test this previous resistance, which could become support. So what now? What could potentially happen is that you could look for a first pullback, something like a blue flag pattern right. So you've learned right, because this is like a start of a new uptrend. It could make a pullback right forming like a full flight pattern and if the price breaks above their size, you can look to get long when the price breaks above this heist and to write this new trend up higher.

So this is what we call the first pullback. So in essence the price broke out of the neckline. You wait for trend continuation pattern to time your entry. So let me share with you a few examples right, so you can see how this one works.

So, first one again you can see over here. This is a chart of a head and shoulders pattern right. This could be a reversal chart pattern right. Price has broke below the neckline, so there's no build up being formed over here right.

So what can we do? Now so a couple of options number one is since the build up is not formed. Let's move on to option number two, where we look for a break and re-test, so we can wait for the price to it goes down lower and it retains this previous support. Support which could become resistant, so what you can look for is like a bearish candlestick pattern like a shooting star right. When this happens, you can look to go short on the next candle open stop-loss.

I usually like to set it a distance above this high somewhere about here, so i don't get stopped out right prematurely and as for potential target, you can reference this low to set your target, so this is kind of like your risk to reward. This would be your reward, let's call it re, and this will be your potential risk on this trade. Let's call it ri, okay, so you can see how this potential trading setup could work out. Another one could be uh, the first pullback.

So let's say you don't get a re-test. Let's say this market continues down lower and it makes this first pullback forming like a bare flag pattern. So another way you can trade. This is that, if, let's say this market breaks below this low, you can look to go shot at this point again, stop loss.

You don't have to reference from this area of support, turn resistance. You can actually reference this. The high of this flag over here so set at a distance above it somewhere about here, could be your stop loss. So this is how you can actually trade the first pullback for this particular scenario.

Okay, so this is how these three potential setups actually work. Can it depending how the market unfolds? So let me give you an example, so this one over here is a ascending triangle right, reversing this earlier downtrend, which you can see right, but this one here, you notice that there is a build up form over here. Right notice, this buildup that's being formed. Consolidation of this candle is nice and tight.

So the way to trade. This is actually quite straightforward. When you notice the build up is formed near the neckline near resistance. In this case, you can just simply place a buy.

Stop order above the highs of resistance, so meaning right when the price breaks out of resistance, you are automatically no longer to distribute you're buying the breakout, as it happens, as for stop loss, you can just reference the nearest swing low and set your stops. A distance below it so i'll, say somewhere about here, so this over here can be your stop loss. So your entry is here e. Okay, stop losses here, so this is how you can trade a breakout with a build up.

Okay, and of course, if you let's say you miss that breakout trade, you can always next look for a break and re-test of this uh previous resistance, which could become support, or you can also look for the first pullback setup, which i've shared with you earlier. So another example: this one here is an inverse head and shoulders pattern again this one here. So let me just explain why i like to. I want to trade break up with a build up, because you can imagine if i don't have a breakup with a build up and i want to buy when the price breaks above.

This highs, there's like no logical place to put my stop-loss, so the nearest kind of swing low is over here and, as you know, for those of you who have been following me for a while. Now i don't like to place my stop-loss just smack below the swing, because what could happen is the market could go up, come back down, lower right, re-test, this swing, low or support and then bounce up higher and then i'll get stopped out of the trade? Okay. So ideally, my stops is always a distance right away from price structure. So if i were to reference this low to set my stop, loss, usually it'll be at least about here.

Okay, so if entry is here, stop-loss will be here right there about. I i didn't use the exact calculation right, but as a rough guide it's about there, but the thing is: if i do buy right now right, you can see that the distance of my stop-loss is pretty wide. I don't want to trade with such a wide stop-loss because it needs to move this much distance right like this equal distance right from here to here right. It needs to move the same amount of distance as my stop loss to go up this much to make a one-to-one risk reward ratio.

So let's say this one here, the distance. Let's say it's like: for example: let's say 200: the market needs to go up 200 for me to earn a one-to-one risk reward ratio, so it's pretty wide. So what i usually like to do instead is to look for a breakup with a build up. So let's say in this case i do have a build up right.

Just imagine. Market starts to consolidate over here right. We have a build up form and then it breaks out. Now, if i buy the breakout again same price point, i can reference this lows to set my stop loss.

So let's say again: i don't like to set it smack below the low a distance below it. Let's say somewhere here so now you can see that the distance of my stop loss is now only 100. It's much tighter and the market don't have to move very fine, my favorite for me to achieve a one-to-one risk, reward ratio and, of course, right the if the tighter your stop-loss right, the more favorable your potential risk to reward on the trade is so. This is why i like to trade, a breakup with a build-up and also, as you know, right.

We talk about volatility in the earlier part of this video, where you know when the market goes into a low volatility environment, it's storing potential energy to make the next move up uh. You know, in this case breaking out higher, for example the ascending triangle. You know towards the end of the triangle pattern, there's this uh volatility in the market, getting smaller, that's what the range of the candle is getting smaller and when it explodes right chances, are it's going to be an explosive move, so this is why also i like To trade, a break up with the build up, because the volatility of this market is getting smaller and it's a good chance. The next move outright could be explosive as well all right.

So this is why and and yeah of course, uh. If, let's say in this case, there isn't a breakup with the buildup, we can likewise go for a break and re-test a re-test of this previous uh resistance resistance, which could become support. In this case, you look for, like a bullish hammer to time your entry to go long or likewise, you can look for a first pullback in this case, would be like a bull flag pattern right. A bull flag pattern like this right and if the flight pattern breaks above this highs, you can look to get long right and to see if you can catch the trend up higher okay.

So with that said, let's do a quick recap right so number one. We are looking for at least 80 candles because, as i've explained right uh the longer it takes to form right, the more significant the chart pattern will be and it increases the odds of a reversal. Then the three setups that i look for when i'm trading a reversal chart pattern is number one setup number one is to break up breakout with a build up. If that isn't available, i could look for a break and read test.

If that isn't available, i can look for a first pullback. If all of this is not available, then just move on to something else. Okay, now moving on right, how do you trade continuation chart patterns? So here are a few things to look for number one. You must have an existing trend once you have it right, you can look to trade, the breakout or you can look to trade, the false break right.

So let me explain: uh this three components in details, so now a mistake that many traders make is that when they trade continuation patterns right, they are pretty much trading with two eyes closed right because they are kind of like not looking at the big picture. So, for example, let's say you want to trade the blue flag pattern. You know that a blue flag pattern right has to exist when the market is in an uptrend. So what many traders would do is that they would see that the market is in a downtrend and when it shows a quick sign of reversal right, looking like this right, where he forms a potential blue flag like this, they would say.

Oh right now, look right. This is a blue flag pattern. It's time to buy right before i miss out the move, four more fear of missing out and then they buy, and then they wonder why they keep getting stopped out when the market reversed down lower. That's because when you trade continuation pattern right, the clue is in the name itself: continuation chart pattern.

You want to trade in the continuation of the trend right, not against it. So whenever you trade continuation, chart patterns, bear in mind, look at the big picture trade in the direction of the trend, not against it. So if you see a market in an uptrend, you can look to trade things like you know the bullish bull flag pattern. You can look to trade things like the ascending triangle pattern right, don't you know, go against the trend, so that's the first thing so now, once you know that you have to be aligned right with the direction of the trend, how can you enter your trade? So this is where you bring us to the setup right: okay, you can look first and foremost to trade, the breakouts.

So this is very simple right. I can simply enter right when the price breaks out of the continuation chart pattern. So, for example, let's say this stock in an uptrend okay, the stock makes a pullback forming a potential blue flight pattern when it continues up and break above this high. This is where you can look to enter the breakout of this bull flag pattern.

So it's pretty straightforward and as for stop loss right, you know that the low of this blue flag pattern right is uh, it's a swing low right. So this is where you can reference to set your stop loss. Usually i like to set it a distance below it so somewhere about here. So pretty much from here to here.

Right will be your wrist or the the distance of your stop loss right. You call it. Sl, stop loss, okay, and if, let's say this, uh stock continues to go up higher, you can one way is to trail your stop loss right and write the treadmill trend up high. You can use things like moving average to help you with it right, but i don't want to get too far away and deviate from our topic, which is chart patterns, so this is the first way to enter a continuation chart pattern right.

Breakout second way is what i call the false break right, so this is very useful is when the market forms a rectangle and it can look to trade, the false break in the direction of the trend. So if you remember a rectangle, is a continuation chart pattern like this, so let's say the stock on the market is in an uptrend. Then it forms a rectangle pattern like this. So false break right occurs when the price comes, and we test back the lows of this rectangle.

Okay, and what usually happens is that the price quicks quickly get rejected and closed back within the range. So this right, it's uh, it's! No! It's not trading a breakout. It's more of trading a pullback. We call this a false break, because the price did a false break out of this lows right only to quickly reverse back into the range.

What you can do is again enter on the next candle open. Stop loss can go a distance below this low and again you can look to see if the price continues up higher and you know break out of the range right and you know, offer you a favorable risk to reward on the trade. So this is one of my favorite trading setups to trade. So let me walk you through a few examples, so you can understand how these two trading setups work.

So first example you can see over here. This is a chart of amazon again over here we have an uptrend and we have this bullish continuation pattern over here right, ascending triangle, so you can see over here. The market came into the highs. Actually i don't have to highlight the high since uh.

It's already on the chart, so you can see that the price comes into the resistance, the highest and consolidate. So at this point, you can look to trade, the breakout of resistance. You have this a bullish continuation chart pattern. So one way to go about it is that you can look to either place a buy, stop order above this high.

So the moment the price trades above the high you will automatically be triggered into the trade or you can also wait for a break and close above resistance. In this case, the has break and close above resistance. You can look to get long on the trade as well as for stop loss. Again, you can see right.

You can now reference the recent swing load to set your stop loss. Uh two levels come to mind. Either reference from this level over here or this minor one over here so again, i like to set it a distance below those low, so i'll say somewhere around twenty four hundred dollars or twenty three. Seventy about here right would be a decent level to set your stop loss right, because if you were to set your stop loss say somewhere about here.

Okay, this is a distance below this swing low and also there is this, like kind of like a minor upward trend line where it could act as support as well. So this is a reasonable level to set your stop loss. Of course, if you want to be more conservative, you want a wider stop-loss. You can reference this lower distance below you'll be somewhere about here.

Right, that's another way: you can set your stop loss as well so option a or b to me. Personally, i think both are decent options to set your stop-loss so there's a first example right trading. This continuation chart pattern another one right. This is a bare flag pattern.

This is in the direction of a downtrend, so you can see over here. We are not trading long right. We are trading towards the downside, because this market is in a downtrend and we have this bare flag pattern over here. So how can you trade the bare flag pattern? Two options: option one: you can wait for the price to break below this swing low.

So if it hits down and break below this swing low, you go short, you can set your stop loss again. The distance above this swing high, probably somewhere, but here will be a stop loss. Okay, that's option. One.

Another option is that for traders who want to be a little bit faster - and maybe you don't wait for the price to break below this, so what you can do is you can actually connect this like trend line over here when the price breaks below this trend Line you go short right again. Stop loss can go up a distance above this highs somewhere about here. So, of course, this one here will get you into your entry much earlier over here e and here's sl. Your entry will be much earlier, but the the downside of to this is that sometimes the price could be a false breakout.

The price just comes down lower and then rarely up higher. So again, i won't say: there's any pros and cons to to to, i would say which is better right, but they are just. These are the two primary primary ways: people treat the bull and bare flag pattern. One is either the trend line, break or one.

They wait for a break and close right or break below this low right before they enter the trade, so these are kind of like the two ways. People usually enter the trade and finally right i'll talk about the false break. Again, one of my favorite trading setup. You can see over here this market is in an uptrend, then it goes into this uh rectangle range over here.

So this is where the falls break occurred. Notice. Here you have something that what we call like a a hammer right, the price take out the lows. Take out the lows forming a false breakdown before it closed back up into the range.

So when you see this pattern right, you can actually look to enter again on the next candle open somewhere about here. Stop loss again the distance below this low somewhere about here, and if the market does break out of the range in this case it goes up, pull back and breaks out. You can see that it's a very favorable risk to reward on this trip, because you are actually buying near the low buying low and selling high okay. So this is a false break setup right.

Another way that you can look to trade is a rectangle continuation pattern. So, let's do a quick recap: shall we number one uh when you treat continuation chart pattern? You must be trading in the direction of the trend. You must have an existing trend right, don't trade against it. Then you can look to trade.

The breakout! That's the first potential trading setup that you can trade when dealing with continuation chart pattern. Alternatively, you can also look to trade, the false break setup as well. Okay, now before i let you go, i have a few final words final tips for you when you're trading with chart patterns. So let's uh talk about the first thing, number one horizontal over slanted so as much as possible.

I like to trade chart patterns which are horizontal in nature. Things like you, know the rectangle, the ascending descending triangle, where the neckline is horizontal. Why is that? Because, when these, when these chart patterns, the neckline is horizontal, it's going to be much more objective. Much more clear-cut when the breakout occurs compared to a chart patterns which is slanted could be like you know, the rising and falling which right those scenarios right.

Sometimes, when you think the prices break out, and then you realize, if you adjust the trend line slightly slightly, the price actually hasn't break out. Yet i'm not sure if that has happened to you, but it has happened to me many times and there's a lot of frustration. Thinking man should i enter now. Does it break out? Has it not break out so yeah? So if you want to avoid all those confusion and frustrations right, especially if you're new to chart patterns, i recommend just focusing on those horizontal chart patterns boundary right.

Let's mention the rectangle ascending triangle, you know could be the head and shoulders double top right where the neckline it's horizontal, it's going to be much more clear-cut to see when the prices break out and your entry is going to be much more clearly defined right. So i favor horizontal chart patterns over slanted ones. That's the first thing. Second thing: is this big picture right whenever your training chart patterns right? That is not an n or vl because always take a step back and see.

Where is the big picture? If the trend is going up higher over time, then clearly you want to look for bullish. Chart patterns to trade, bullish reversal, chart patterns to trade, don't fight against the trend right if the market is an uptrend, doesn't make sense to be trading a bad flag pattern. No, you have better odds trading, a bull flag pattern. Another thing to add is that also, if you're trading the u.s stock market, it has a buyer's right which is towards the upside in the long run, for the u.s stock market.