Chart Patterns Videos

This video reviews this day traders favorite charting pattern, the inverted head and shoulders which resembles a W bottom.  He reviews a few examples of trades that he placed and mentions that it is very important to see volume on the break through the neckline of the inverted head and shoulders. This pattern tends to occur near significant bottoms in the market or a stock. 

A trader needs to train their eyes to spot this pattern and be flexible in identifying it.  He mentions how he likes to see a tight consolidation on the right shoulders before it breaks out.  This indicates an unwillingness for the stock to back down and shows its energy building without a retracement.

The speaker whiteboards two very reliable chart patterns which are two of his favorites.  The double top and double bottom repeat themselves due to human emotion.  Traders need to see how the market reacts at the pivot point which represents the pivot which is between the two highs or two lows in both of these patterns.

For a double top, the distance between the high and the pivot point represents the amount that a stock is expected to head lower after it breaks below the pivot point.  Conversely, for a double bottom, the stock is expected to move higher in the amount of the pivot point minus the double bottom once it breaks above the pivot.

The video covers a technical chart formation known as the rounding top.  The rounding top occurs after a strong up move and signals that the momentum has slowed down and that the stock is vulnerable to a breakdown.  Many times, the head & shoulders top can be a form of a rounding top. 

The speaker provides a few examples and even illustrates what to do when the pattern does not work out.