Know the Chart Type

Chart Pattern or Chart Pattern

It is a graphic pattern that occurs repeatedly. Chart patterns are very important in technical analysis, besides being able to detect price direction, this pattern can also be observed in all timeframes, from minutes, hours, days, to months. Here are some of the various chart patterns:

Reversal Pattern

This price pattern gives a signal that the price has a high probability of reversing the direction of the previous main trend.

• Double Top and Double Bottom
• Triple Top and Triple Bottom
• Head And Shoulders
• Falling Wedge
  
• Rising Wedge
• Rounding Bottom
• Bump and Run

Continuation Pattern

The price pattern gives a signal that the trend will continue even though it has reversed direction. This is quite the case, especially because market movements often experience retracements.

• Flags
• Pennant
• Symmetrical Triangle
• Ascending Triangle
• Discending Triangle
• Rectangle
• Cup With Handle

CHART

Candlesticks

Japanese Candlestick or better known as candlestick, is the oldest technical analysis tool, used since the 1700s. One hundred years before the West created the Bar Chart analysis, Point an Figure. Candlestick chartists draw their own charts from right to left, using crow feathers and Indian ink. Initially this candlestick was used to analyze the movement of rice.

In forex, to form a candlestick it takes information on the opening price (Open), the highest price (High), the lowest price (Low), and the closing price (Close). The body on a candlestick is known as the real body, representing the range between the opening and closing prices. A black body indicates a lower closing price than the open (or so-called bearish pattern). Meanwhile, if the body shows white, it indicates the closing price is higher than the opening price (or so-called bullish pattern). The small line above or below the real body, called the upper/lower shadow, represents the period's high/low price.

GENERAL CANDLESTICK PATTERNS

Long Days

Shows a large difference between the open price and the close price in a period. The shadow line is usually shorter than the real body.

Short Day

Short Day indicates a small difference between the opening price and closing price in a period. The real body and shadow lines also look short.

Marubozu

In this pattern there is no shadow line from the real body.

Spinning Top

In this pattern the shadows line is longer than the real body.

Doji

Long-legged Doji, formed when the upper and lower shadows form a long line, then the price closes in the middle. This pattern indicates neutral (indecision).

Dragon Fly Doji, formed when the lower shadow forms a long line and there is no lower shadow. This pattern is usually a bearish reversal signal in a trend.

Gravestone Doji, formed when the upper shadow forms a long line and there is no lower shadow. This pattern is a bullish reversal signal in a trend.

Four Price Doji, formed when the open, high, low and close are at the same price. The pattern indicates quiet trading activity.

Bar Chart

According to most foreign traders, bar charts are easier to use than candlesticks, where the bar units are simpler. The advantage of bar charts is to identify only open, high, low, close (OHLC) patterns without the need for complicated understanding of Doji, Spinning Top, Paper Umbrella, etc.

Apart from that, the use of bar charts is not only based on OHLC. But only need to pay attention to High and Low on the market to get a profit. Likewise, when you see a close bar to another bar, it will be easier to understand the market movement.

Line Chart

A line chart that only has a closing price, without involving the highest, lowest, or opening prices. The line is connected with each closing price sequentially every hour. However, the simplicity of this chart makes the chart easier to see the direction of price movements.

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