Friday, January 9, 2015

Crudeoil positional analysis 09.01.15 Update II

Chart Patterns. Trends

The price action of stocks can generally move in one of three ways , Up , Down and sideways. I use chart pattern setups to identify changes in trend direction or continuation patterns that increase the risk reward in my favor when trading.

A stock is said to be in an up trend when it makes a series of higher highs and higher lows. This can easily be identified on a chart as a series of steps like those on a staircase  which cause the share price to rise. Below is an example of such a pattern


Therefore one of my first trading rules is to buy a share that has a chart that looks like the one above.

A  downtrend  is the direct opposite of an up trend in that it has a series of pivot point highs that are formed lower than the preceding high and each pivot low is also lower. An example of a down trend is shown below. Study this chart carefully as every trader needs to avoid buying any share that displays the following chart in order to survive as a trader.