Become a Chart Patterns 'BEAST' | 3 Hours of 'Uninterrupted' Chart pattern course for beginners💯😎

0:03 foreign I know many of you have seen a lot of videos on chat patterns on YouTube and how to trade them but most of these videos don't tell you why you should trade them and in fact why these chat patterns actually work in the market so this is going to be one of the most comprehensive courses on chart patterns out there many professional Traders even sell paid courses on chart patterns that are worth thousands of rupees with very little content but guess what this course is completely free of cost and is exclusively for educational purposes only so share it with all your fellow Traders and friends and if you are new to the channel consider subscribing to the channel and also enable the Bell

0:48 icon so that you won't miss out on any upcoming videos now the working of these chart patterns are quite simple chart patterns work by representing the Market's supply and demand this causes a trend to move in a particular way on a trading chart forming a particular pattern so when a Trader looks at the price chart of a stock or an index it can often appear to be completely random price movements this is often true yet within those price movements are patterns so chart patterns are geometric shapes found in the price data which can help a Trader understand the price action as well as make predictions about where the price is likely to go however chart pattern movements are not guaranteed and simply trading the chart

1:34 patterns is not a sure short way to success in the markets and it is better used alongside with other methods of market analysis so in general there are three types of chart patterns there are continuation chart patterns reversal chat patterns and neutral chart patterns the topic of discussion in this video are continuation chart patterns I will talk about 5 most common continuation chart patterns and why and how they are formed and how to trade them with the proper entry stop loss and Target setups so if you don't know what continuation chart patterns are as the name suggests these patterns signal that the existing Trend in the market will most probably continue or in simple terms it predicts that the market will continue in the same direction after the end of the

2:21 pattern now most of these continuation patterns are formed as consultations in between Trends so it's like Market taking a tea break because of exertion and getting back to work after refreshment we will be discussing five patterns and their subcategories we will start off our discussion with flag patterns followed by Penance then we will talk about the ascending and descending triangles further we will discuss about the rectangle patterns and finally we will wind up with cop and handle and inverted cup and handle patterns before moving on to the patterns let me make something clear up front it's none other than time frames all these patterns that I am going to talk about forms in almost all the time frames from intraday to swing to

3:06 positional time frames all these patterns work better as the time frame increases because it takes more time to form and therefore more people are aware of them moreover the time frame to trade these patterns will depend on your trading style the duration you want to hold positions and your expectations so I have already made a video on how to select the appropriate time frames to trade so you can watch that video to know which time frame to choose depending on your trading style okay then let's get started the bullish flag or the bull flag as the name suggests forms during a bullish Trend the bull flag starts with a strong almost vertical bullish trending move which then stabilizes and turns into a

3:51 minor bearish correction with parallel tops and bottoms which are important levels of supports and resistance now there are three components to any flag patterns that make it so I am going to give you a few hints to correctly identify the bull flag we have to look for a preceding up move or an uptrend which makes a flagpole as we know that the bull flag pattern forms during a bullish Trend this means that the candles range is more bullish than usual and they tend to close near the highs so it is a strong indication of buying interest in the market and it also signals that the Bulls are dominating the market now after the strong move higher the market needs to take a break now this can be seen as a profit booking phase where the initial buyers are

4:37 looking to book some of their profits so here's where you can expect a potential bull flag to form as the market does a pullback now the type of price action that is exhibited in the pullback is what separates a flag pattern from a normal pullback now what you are looking for is a shallow pullback that consists of small ranged candles compared to the earlier strong bullish move or it can be seen as a group of indecision candles after a strong bullish move now this tells you that the sellers are struggling to bring the price down and that the buyers are still in control now if you see a steep pullback with large range of candles then it's probably not a bull flag pattern generally this retracement ends below the 38 percentage threshold of the original Trend as

5:25 indicated by the Fibonacci so in general it may not be considered as a flag pattern if the retracement goes below 50 percentage of the pole now the tighter this range the more likely the market will break out higher now that we have learned how to identify a bull flag we can discuss how to trade the flag pattern so I will discuss the entry methods where to place the stop loss and how to set the targets now starting off with the entry criteria as it is a bullish continuation pattern we are only interested in the break above the resistance line so you can take a long entry following a breakout of the level that is you can enter at the moment when the price breaks above the resistance trend line or you can look to buy a body high price of the breakout candle after

6:10 it closes now the second method is to wait for a pullback or a retest back to the breakout level and then take a long entry when the price moves higher or when the price moves above the breakout candle high now you may be probably wondering which one is a better method well there's no best approach let's say if you enter the trade as and when the breakout happens it could potentially result in a force breakout also but if it is a real Breakout out it's the best possible price you can get alternatively if you wait for a close above the highs you will reduce your chances of a fast breakout but if the breakout is too strong you will end up entering at a much higher price the same is the case with waiting for a pullback or a retest which may not happen often if the market

6:56 is trending strongly and as a matter of fact you will miss out on the trade completely so it is up to you to decide your entry strategy and continue practicing it over a large number of Trades and above all it is always recommended to confirm the validity of a breakout using volumes and other indicators so a higher than average volume can validate a breakout most of the time as it shows the interest of the market participants and low volume breakouts are most likely to fail using momentum indicators like macd and RSI can also help you identify your true breakout I have already made videos on all these topics so if you want you can check them out let us now focus on the criteria for setting stop losses so how to set your stop loss when trading the

7:42 bull flag pattern now you don't want to set your stop loss at obvious levels like supports and resistances swing highs or loss Etc and why is that because you can get your stop loss 100 easily it is as obvious a level to you as it is for others including the smart money so how do you get a proper stop-loss setup it's simple your stop loss should be at a level that if crossed invalidates your trading setup so what are we trading here we are trading a bull flag and the pattern becomes invalid when the price breaks and closes below the bottom trend line support so you have to keep your stop loss below this particular support level but there are still chances of long Wicks which can take out your stop loss and then move higher in the desired

8:29 Direction which can be pretty annoying so to be extra safe you can give your trades more breathing space by setting your stop loss a particular distance away from the market structure using an indicator like ATR so once you identify the swing low of the bull flag pattern set your stop loss one ATR below the swing low level and now let's learn how to set Target for bull flag patterns now there are many ways you can cash in your winners and one of the most common approaches is to have a predetermined profit Target based on the length of the flagpole this method is also known as the price projection method let's measure the length of the flagpole from the bottom of the bullish price move to the top of the resistance level and then project this length from the breakout

9:15 point above the resistance trend line and this will be your profit Target in the future an alternate method is to choose to Trail your stop loss until the market takes you out of the trade why is this a better option think about this the bull flag pattern usually appears in a strong trending Market but just after it breaks out of a range in such market conditions there is a lot of potential for the trend to continue and the only way to ride it is to Trail your stop losses now the question is how to Trail your stop loss in the best possible manner well you can use a tool like moving averages or Channeler stock to Trail your stop loss and only exit the trade the market closes Beyond it moreover it is much better if you use a combination of both the projection method and the trailing stop loss method

10:02 so that you can predict the future move beforehand using the price projection method so as to lock in part of your profits there and then write the rest of the position using the trailing stop loss and thereby not impacting your psychology and avoiding any potential losses now moving on in the market there are numerous opportunities that are available for trading bull Flags but if you were to ask me to select a few I would choose 4 different scenarios to trade with the bull flag so that my risk to reward is satisfactory now these four scenarios includes number one the formation of bull flag during a level Breakout which is followed by a primary pullback the second scenario is when the flag formation occurs during an uptrending Market which further signals a trend continuation the third scenario

10:49 is when bull Flags occurs inside a range market and the final case is when the full flag occurs in a downtrend signaling a trend reversal now the entry Target and stop loss criteria are the same for all these cases so I won't be discussing them individually for each case let us take a look at the first case this happens when the market breaks out of a range and then does a pullback for the first time this is one of the best times to trade the bull flag pattern and why is that because when the market is in a Range it will eventually have to break out and besides the longer it stays in a Range the harder it will break so what we are concerned about here is a resistance breakout where we can expect a bull flag to form so when the market finally breaks out the

11:35 traders who miss the breakout move can wait to enter the market at the first indication of a pullback these primary pullbacks usually have a shallow retracement as not many Traders want to trade against the strong momentum and this presents a pullback trade with a very high probability so if I were to explain the process in a rather simple fashion it would go something like this first of all you have to identify a range Market or a market testing a resistance level for quite a while now let the market break out of the resistance level now you have to wait for a bull flag pattern to form in the form of a primary pullback now once you find such a formation you can look to take a long entry on the break above the heist has it ever occurred to you that you

12:21 think the price is too high and it would be better to wait for the price to retrace to the support or back to the breakout level before you go long but the next thing you know the market continues to break new highs and you are left on the sidelines regretting your decision so have you learned something from this to put it simply in a strong trending Market it's far easier to buy breakouts than to wait for the price to pull back which rarely occurs in such a market you can use the bull flag pattern as an entry trigger here's how you can trade bull Flags in a trending market now the first step obviously is to find the market Trend you can look for strong trending market with the use of moving averages for example for short-term trades you can make use of 20 simple moving average and for swing or

13:07 positional trading purposes you can make use of 50 or 200 period moving averages now for this case let us consider a 20 moving average when the price trades above the 20 moving average predominantly and is sloping higher we can conclude that the market trend is strongly bullish in a short-term scenario now you have to wait for a bull flag formation to develop in the form of a pullback now once you identify your pattern you can look to take a long entry now as I have mentioned earlier the same entries stop loss and targets can be used for this purpose predominantly you can expect a bull flag to form after a breakout or during a strong Trend however there are times when a bull flag pattern can form when

13:53 the market is in a range and at a resistance level so in one of my price action videos I have talked about the concept of breakouts with build up era resistance or support level you can find the video on the I button if you want to learn more about it afterwards now the same concept applies here a build up near a resistance level happens because there are no sellers stepping in or the buyers are willing to buy at higher prices now whatever is the case this is a sign of strength and the market could break out higher so how do you identify such an opportunity primarily you have to identify a market which is in range then you have to wait for a flag pattern to form near the resistance level in the form of a build up now as always you can trade the brake above the build up or wait for the market to close above the

14:40 resistance level there is no change in the entry stop loss and Target criteria for this case also now if you are probably thinking what the hell this dude is talking about just a few minutes ago you said that bull flag is a trend continuation pattern now why are we looking for it in a downtrend yes there is no denying that the bull flag is indeed a trend continuation pattern but what if I tell you that there is a way you can profit by using the bull flag as a trend continuation pattern even on a downtrend now this method has to do with the market structure so if you don't know about the market structure you can watch it from my price action playlist it's a rather simple method you have to look for a few things before you proceed first of all

15:26 the price must close above the downward trend line resistance now we are talking about a break in the downtrend structure then if the price forms a bull flag above this trend line resistance hola you have got a jackpot trade what you're doing here is trading between an ending downtrend and a potential starting uptrend you can benefit tremendously if you are able to catch the uptrend from the beginning itself now the entry stop loss and Target conditions will remain the same but I suggest you use a trailing stop loss such as a 20 period moving average since we are taking sort of a contrarian position just to be safe now a beer flag pattern is just the opposite of a bull flag pattern it is

16:12 yet another continuation chart pattern but the beer flag signals that the market is likely to move lower so I will be quick with this one or else the length of the video will be too long and if you are able to understand everything associated with trading a bull flag then trading a beer flag is just a walk in the park you just have to flip everything you learned with the bull flag at 180 degrees and there you have it you now know beer flag pattern now here's how to identify a beer flag first you have to look for a strong trending move lower this means the range of the candles is more bearish than usual and they tend to close near the lows after the strong bearish move over the market takes a break in the form of a pullback now the pullback should consist of smaller range candles compared to the earlier bearish move and the more

16:59 tighter the range the more likely the market will break out lower now the strong bearish move represents the port of the flag and the price console rotation during the pullback forms the flag of the pattern the flag retracement should not move Beyond 50 percentage of the poor length or else it is not considered a bare flag pattern now the entry criteria are also similar except for the fact that you will now be looking for shorting opportunities only being a bearish continuation pattern now you can look to sell when the price breaks below the support trend line but it is usually prone to fake outs so the better option is to wait for the breakdown candle to close and then enter below its low but sometimes if the breakout candle is very large you'll be

17:45 entering at a very low price and the risk to reward will be affected so you can either wait for a pullback or rate US back to the breakdown trend line and then take a short entry when the prices start to move lower now the issue with this entry technique is that during a strong downtrending Market the price won't pull back often enough and you will miss out on most of the opportunities so it is up to you to decide your entry strategy and continue practicing it over a large number of Trades also make sure to validate if the breakout is Real by using volumes and momentum indicators like mac drsi Etc when it comes to protecting your positions you can place your stop loss at a level that invalidates your trading setup so a beer flag pattern becomes invalid if the price breaks above the

18:32 resistance trend line with that idea in mind you have to keep the stop loss above the resistance trend line or to be even safer you can give the price some breathing space by keeping one ATR buffer above the swing high level depending upon your risk appetite now finally the target can be based on the price projection method or trailing stop loss method in case of price projection method you have to measure the length of the flagpole and then project it from the breakdown point below the support trend line this will give you your projected future Target price for the trailing stop loss method you can make use of moving averages like 20 or 50 period moving average depending upon your trading style or you can use an indicator like Chandler stop to ride your positions in case of a range

19:18 breakdown or strong downtrend now it is a deadly combination if you make use of both these techniques to execute your winners now the most important thing to figure out is where to find these flag patterns you can find a beer flag during a support line breakdown which is followed by a primary pullback now the breakout candles represents the flag while the primary pullback forms the flag consolidation of the pattern now you can take a short entry as per the entry criteria of your choice and the price breaks below the flag consultation now the most common place where you will encounter a beer flag is during a strong downtrend as we have discussed earlier we can identify the market Trend using moving averages now the selection of moving averages will depend upon the

20:04 trade duration or your trading style for example the 20 moving average is good enough to determine the short-term Trend the 50 moving average is suitable to identify the medium term Trend and the 200 moving average can gauge the long term Market Trend but the most important thing is to make sure that the price stays below the moving average and is sloping downwards now yet another occasion to look for beer Flags is in a Range Market especially those where there is a built up happening near a support level now this buildup can sometimes be in the form of a flag consolidation and you can enter a short position when the price breaks the build up and the support level now the entry criteria stop loss and targets will all be the same as in the other cases but make sure that the breakout is a valid one you can also find a bare flag at the

20:52 end of an uptrend when there is a break in the uptrend structure which is accompanied by a flag pattern consolidation now this will help you enter a trend reversal even before it happens Penance are a class of chart patterns that closely resemble the flag patterns and symmetrical triangle patterns in the way they form and give breakouts but if you were to consider a pennant and a flag as two brothers then the pennant is the more aggressive brother due to the explosive breakouts it provides and the reward for risk it generates now there are two types of penance bullish Penance and bearish patterns let us focus on the bull Penance first now the bull pennant is a chart pattern that forms a triangle during the pullback it would consist of

21:37 two pods the impulse move which forms the leg or the ball of the pattern and the correction move which is formed as a result of the pullback now you may ask what is the difference between a bull pennant and a symmetrical triangle because they both look similar now the answer is quite simple the difference is in the duration of their formation with a symmetrical triangle you can clearly see the swings of the pattern however the candles of the bull pennant are too crowded and two volatile for you to see the swings regardless a bullpenin is more similar to a bull flag pattern now as I have cited earlier bull Penance creates a more explosive breakout than bull flag pattern now let me explain the reason why I hope you have seen videos in which a Coca-Cola bottle is shaken

22:24 and then thrown onto the ground now the cap explodes and the boat till flies off I don't want to go deeper into the physics of this but one of the factors that triggered this event is actually the shape of the cork bottle itself if you try the same experiment with a Coke can you may not get the same result now the bottle is shaped similar to a nozzle with a width of the bottle becoming narrower towards the top in comparison to a can where the width is almost equal throughout so what's the deal once you shake and throw the bottle the gas pressure builds up and the coke wants to get out and the easiest exit is through the cap but as they head towards the Gap the width starts getting narrower the pressurized gases inside the bottle would go into rage mode and blast open the Gap please don't blame me for this

23:11 terrible physics lesson but the point that I am trying to prove is that the same thing happens with buyers and sellers in a Bull Pen and pattern the shrinking prices from left to right of a pen and pattern is a sign of impending volatility as both the buyers and sellers are itching to get out of the pullback now this can result in a rather explosive breakout but since the bullpen and pattern is not a trend reversal pattern instead it is a trend continuation pattern we will only look for buying opportunities this means that you are better of trying to use this pattern to ride on the existing trainers rather than catching the bottoms now let us talk about the entry stop loss and Target criteria for this pattern now starting off with the trade entry criteria one of the most costly mistakes

23:56 that Traders make while trading the Penance is entering a bullpen and too early as you know ranging markets or even pool bags can be challenging to enter for two main reasons the range can overshoot or the range can undershoot now overshooting happens when the market is highly volatile and the prices will move beyond the trend line more often forming false breakouts now undershooting is the opposite that is the price fails to test the trend line every time in case of a bull pennant we should be more cautious about overshooting due to the tight range so what would happen if you buy as soon as the breakout above the trend line happens or if you place a buy limit order above the swing High more often than not the price could easily touch your buy order and reverse back into the

24:42 range forming a fake out or overshoot now this can be annoying and can result in losses so what is the key here now the ideal thing to do is to wait for the bullish breakout candle to close above the pen and line if the price makes this kind of a move it's clear that the buyers who got squeezed finally managed to break out strongly similar to the case of a exploding Coke bottle so you can look to to buy Above the breakout candle's high price but sometimes the breakout candle will be too large and you will be buying at a very high price thereby affecting your robot tourist ratio the best move in such a situation is not to take the trade at all or you can wait for a pullback or retest back to the breakout level and then take an entry when the price starts to move higher but because of the explosive

25:28 nature of breakouts from the Penance the chances for a pullback or retest are fairly dim so the best possible entry could be above the breakout candle high now validating the breakouts using volumes and other momentum based indicators can be a good practice during the pen and consultation the volume has to decrease due to the evidence shrink in volatility and the breakout has to be supported by higher than average volumes which could indicate a rise in the buying interest now that you have learned how the bullpen and works and how to enter it let's talk about how and where to set the stop losses when trading the bullpen and pattern as I have already discussed you don't want to set your stop loss at obvious levels like support and resistance swing highs or laws Etc because you can get stop loss 100 easily so your stop loss should

26:15 be at a level that if crossed invalidates your trading setup now we are trading a bullpen in here and the pattern is deemed invalid when the price breaks and closes below the bottom trend line support so you have to keep your stop loss level below this trendline support or below the swing low level to be precise now there are still chances of long bicks due to the overshooting issues which can take out your stop loss if you keep it very tight and then the price can move higher in the desired Direction which can be really frustrating so to be extra safe you can give your trades more breathing space or buffer by setting the stop loss some distance away from the pen and Market structure using the ATR indicator now once you identify the swing low of the bullish pen and pattern you can set the

27:00 stop loss 180r below the swing low level and finally let's learn how to set a target for the pull pen and patterns now there are many ways that you can exit your windows and one of the standard approaches is to have a predetermined profit Target based on the length of the leg or the pole of the pattern this is called the price projection method and here you have to first measure the length of the pen and leg then project this length from the breakout point above the resistance trend line now this will be your profit Target you can also choose to Trail your stop loss until the market takes you out of the trade now is this a better option think about this the bullpen and pattern usually appears in a strong trending Market or just after the price breaks out of a range so in such market conditions there is a lot

27:46 of potential for the trend to continue higher and the only way to ride it is to Trail your stop losses now to Trail your stop loss in the best possible manner you can use the indicators like moving averages or Chandler stop and only exit the trade if the market closes below it moreover it is a much better option if you use a combination of both the price projection method and the trailing stop loss method so that you can gauge the potential of the move beforehand using the projection method so as to lock in part of your profits there and then write the rest of the position using the trading stop loss method thereby not impacting your psychology and avoiding any big losses due to price reversals now that you have learned what a pennant is and how to trade one it is essential to make a note of where to find one so

28:33 what are the different types of Market condition where you can find a Bull Pen and pattern now pull pens can be found almost anywhere be it in uptrend range or downtrend the only thing to remember is that whenever it forms in the market the bullpen end is a bullish continuation pattern and our bias should always be looking for long trades only with that in mind let's talk about each case separately first you need to Define what an uptrend is in terms of your trading style and time frame you trade because if you can't Define a trend objectively based on your requirements then it is difficult to spot a bullpen and setup that satisfies your trading style now the easiest way to define a trend is by using a trend filter such as a moving

29:19 average now you can use any moving average like 20 period 50 period or 200 period Etc to identify the trend based on a short term medium term or long term perspective let's say I have a medium term Outlook or I am a swing Trader and I make use of the 50 period simple moving average to define the trend now if the price is above the 50 period moving average it means the trend is bullish for me then I will look for bull pennant opportunities and if a bullpen and pattern is spotted then you can look to take a long entry above the breakout candle and since we don't know how long the trend last you can even use the 50 moving average as your trailing stop loss and we would exit only when the price crosses below the 50 moving average so here not only do we use the

30:06 50 moving average to filter Trends but we can also use it to book our profits since the bullpen and Laser Trend continuation pattern you might have the idea that this type of setup is unfavorable so how exactly are we planning to trade the range Market literally speaking we are not trading the range Market what am I suggesting now it means that instead of trying to buy the highs and lows within the range we wait for the range to potentially end that is we look for tight consolidations or build ups in the form of a Bull Pen and pattern which is forming near the resistance level so the moment you see a bull pennant forming at the resistance it tells you that the buyers are starting to dominate and an explosive breakout is imminent you can look to

30:52 enter above the breakout candle or when the price closes above the resistance and maybe you will even get a retest if you are lucky enough now the stop loss and the targets are same as we have discussed earlier and since there is no valid Trend you can use a title moving average such as a 20 period moving average if you wish to trade your stop loss even though the bull pennant is a trend continuation pattern there is still a way you can profit by using the bull pennant as a trend continuation pattern even on a downtrend now this method has to do with the market structure here you have to look for a few things before you proceed first of all the price must close above the downward trend line resistance now we are talking about a break in the downtrend structure then if

31:37 the price forms a bull pennant Above This trendline resistance you have a jackpot rate what you're doing here is trading between an ending downtrend and a potential starting uptrend so you can benefit tremendously if you are able to catch the uptrend from the start now the entry stop loss and Target conditions will be the same and similar to the range Market strategy I still suggest you use a tight trailing stop loss such as a 20 period moving average since we are taking sort of a contrarian position I won't go into all the details of a beer pennant this is exactly the opposite to Bull pennants now it is a bearish continuation chart pattern it has a leg comprising of impulse candles with a strong bearish body followed by a

32:23 tight consolidation associated with smaller candles and a contraction in volatility we expect the price to break out explosively below the trendline support level and continue with the trend even though this pattern is usually found in a downtrending market we can also spot it when the price is about to break down from a range below a support level where a buildup IS set up in the form of a beer pen and pattern you can even find it at the end of an uptrend where the break of the structure is accompanied by a beer pen and pattern now if I were to discuss the entry criteria we will only look for shorting opportunities since the breakdown is expected to be explosive in nature we can look to enter when the breakout candle gives a close below the trendline

33:09 support you can then short below the low of the breakout candle in case if the breakout candle is too large and is affecting your reward to risk it is better to drop the trade or wait for a pullback to the breakout level which happens less often in the case of a pennant so it is up to you to decide where you want to enter now make sure to validate the breakdown every time using volumes or momentum indicators or both now the volume generally declines during the pen and formation and it increases above average when the breakout happens now the stop loss can be kept above the swing high level of the pennant and providing 180r buffer above the swing high can deal with the unexpected overshoots and stop loss handling now the target can be kept by using the price projection method where the length

33:56 of the leg is set as the Target by projecting it below the breakdown point or you can adopt the trailing stop loss method by making use of suitable moving averages when you are planning to ride the trend and you only exit when the price closes above the moving average now moving on we will focus on the triangle patterns namely the ascending triangle and the descending triangle chart patterns so let's start with the ascending triangle patterns the ascending triangle is a bullish chart pattern that signals the market is about to head higher now as you can notice the ascendant triangle has a series of higher lows that approach a resistance line now this is a sign of bullish strength and for a few possible reasons now the higher lows are an indication that the buyers are willing

34:42 to buy at higher prices now think about it if the buyers were not willing to buy at higher prices you won't see higher lows coming into the resistance now the fact that the market forms a series of higher lows tells you that there is demand even as the price continues higher the second point is that there is a lack of selling pressure so if there was actually a strong selling pressure the price would not remain at the resistance for a long period instead it would rather move lower very quickly but since the price is hovering near the resistance it means there is a lack of selling pressure even though it's an alluring level to sell yet another point to keep in mind is that there are a lot of buy stop loss orders that are clustered above the resistance because

35:27 as the price retests the resistance every time more Traders will look to short the market and they will place their stop loss above the resistance level in such a situation think about what will happen if the market breaks out higher well all these by stop loss orders will be triggered and this will fuel further price advances towards the upside so don't make this common mistake when trading ascending triangle pattern because most trading books will tell you to go short and the price is at the resistance level but not every resistance is meant for shorting instead you must watch how the price approaches it since you have learned that higher lows coming into the resistance is a sign of bullish strength this means the market is likely to break out higher from the resistance and the last thing

36:14 you want to do is to go short and trade against it I hope things are making sense now we will talk about the entry criteria so how to better time your entry well there are a few ways to do it the first approach is to go along when the price breaks above the highs of the ascending triangle or above the resistance level now all you need to do is to place a limit by order above the resistance level and you will be immediately long when the price breaks above the highs if the breakout is real this is one of the best prices to render but this method is very risky and chances are it might be a false breakout the next method is similar to the previous approach the only difference is that you wait for the price to break and close above the highs of the ascending

36:59 triangle pattern you can under long above the breakout candle highs once the candle closes this method reduces the likelihood of a false breakout but if the breakout momentum is quite strong you will be entering at a very higher price so if you are an experienced Trader then you can even enter the market as the price pulls back or retest to the resistance line of the triangle pattern now this can help you enter the trade even if you miss out of the breakout move and it offers a better entry price than waiting for the close of the breakout candle but the issue with this approach is that the market may not give a pullback or retest every time so it is up to you to choose the Android type that you like based on whether you are a conservative or aggressive Trader with your approach now make sure to validate the breakout with

37:45 volumes and other momentum indicators to see if there is actually an interest in the market participants to take the prices higher now we will learn how to set a proper stop loss so that you don't get stopped out too early now it doesn't matter whether you are trading the ascending triangle breakouts pull bags Etc because the concept is the same your stop loss must be at a location that if reached will invalidate your trading setup this means if the market hits the stop loss you will automatically know you are wrong so a stop loss below the resistance level is not a very good idea so where else will you place it think about it what is the ideal place to set a stop loss so that if the market reaches it you know the ascending triangle pattern is invalidated since

38:32 the pattern forms higher swing lows and if the price moves below the recent swing low and forms a lower low then we can be sure that our analysis has gone wrong so it is exactly the place where you need to keep your stop loss that is just below the recent swing low level you can give the price some breathing space by adding one ATR buffer below the recent swing low I hope it is clear now the third and most important point when and where to exit your winning trades for maximum profits now as always there are two techniques you can consider the trailing stop loss method and the price projection method the idea of a trailing stop loss is that we have no idea how long a particular Trend will last so we Trail our stop loss to write the trend

39:18 as far as possible to lock in your gains as the market moves in our favor so how do you Trail your stop loss well as I have mentioned a number of times you can use an indicator like moving average for example you can Trail your stop loss using 50 period moving average for a swing trading strategy this means you will hold your position until the market breaks and closes below the 50 moving average now some of you might be wondering why 50 moving average always actually there is nothing special about 50 moving average a much better question to ask is what type of Trends do you want to capture and what is your trading style now for a long term trade you can use the 200 period average for short-term Trends you can use the 20 period moving average and so on the second method the price projection

40:04 method is a classical charting technique to project where the price will exhaust itself so here's how it works for an ascending triangle pattern you have to calculate the width of the ascending triangle from the highest point which is the resistance level to the lowest point now add this amount to the breakout level and that's your price projection or expected Target level one of the issues with price projection is that the market can almost hit your target profit only to make a sudden reversal and sometimes it can reverse all the way back and hit your stop loss so what would you do to avoid something like that happening the best idea is to combine both the techniques that is make a trailing stop loss and price projection combo this means if the market moves in your favor but it hasn't

40:51 reached your price projection level you can utilize the moving average to log into your profits so even if there is a sudden reversal you still protect what you have and do not give everything back to the market now the descending triangle is yet another logical pattern and if traded correctly it allows you to catch explosive breakout trades about to occur this is a bearish chart pattern that shows the sellers are in control and it signals a bearish trend continuation now the descending triangle looks like a series of lower Highs coming into an area of support the pattern signals strong selling pressure and a lack of buying pressure usually when the price drops lower more demand comes in to push the price higher but that is not the

41:37 case for descending triangle because as the price drops lower there is still a lack of buying pressure instead the sellers are willing to sell at even lower prices that's why you get a series of lower highs we attending the point to consider is that sell stop loss orders are clustered below the support level this is because many Traders will buy because the price is at the support and they will set their stop losses below the support level since that's what most textbooks teach them now as more Traders do it the cluster of stop losses below the support level builds up our time and since the market moves from one area of liquidity to the other the price is likely to break below the support and Trigger all these clusters of stop losses which will increase the selling pressure and pushes the price downwards

42:24 now being a bearish continuation pattern the most common way to trade a descending triangle is to go short when the price breaks below the support level still there are important things to consider if you want to find the highest probability breakout rates the breakdown should occur near the apex of the descending triangle Apex refers to the tip of the triangle pattern where both the trend lines meet now the reason you want to short near the Apex is that it is where the volatility is the lowest and the prices are squeezed now when the volatility decreases chances are the price will explode out of the descending triangle and quickly move in your favor on top of that the more times the support level is tested the better this is simply because when the price tests the support level multiple times it will

43:11 attract more buyers and thereby increase the number of stop loss orders below the support level now this is great for a breakout Trader because if the price breaks below the support all these clusters of self stop loss orders would be triggered thereby increasing the selling pressure towards the downside now moving on we will focus on how to trade this pattern so how to time your entry and set your stop loss I don't know if you have observed whenever the price Falls it moves quicker than when it rises so if you wait for the breakout candle to close below the support level chances are the price might drop a lot and you end up chasing the market thus in this case it is preferred to use a limit sell order and enter the trade when the price just breaks below the

43:57 support level now if you are a more conservative Trader and you do not want to blindly place a sell limit order at the breakout point because the price could give a false breakout and Rise higher so it is ideal to wait for the price to confirm your bias before shorting the markets after the breakout candle closes below the support level but there can be occurrences when you can miss the breakout altogether what happens then so if such a thing happens the last thing you want to do is Chase the market after a breakdown of the pattern instead a better option is to wait for the price to retest the breakdown point now if you wait for the retest you are entering a favorable trade location where previous support is likely to act as a resistance level this means you have a tighter stop loss on your trade which offers a better reward

44:45 to risk ratio but sadly pullbacks or retest don't happen very often with this pattern also making use of volumes for the breakout validation is a good practice now what about the stop losses straight away ask yourself the point where the descending triangle pattern gets invalidated is when the price moves and closes about the most recent swing high level so a good stop loss would be above the most recent swing high level and if you would like to be even safer give it some buffer like 180r and set it above the recent swing high now finally how to exit your winners for maximum profits now similar to every other pattern there are two ways to exit the winning trades price projection method and trailing stop loss method in the

45:32 price projection method calculate the distance between the highest and lowest point of the descending triangle now take this distance and project it downwards from the breakdown point this projected future price point is where you exit your trade after you enter a breakdown of the descending triangle pattern you can also use the price projection technique to decide whether it's too late to enter a trade or not that is if the price is close to reaching its projection there's probably not much reward left in the move and you might want to skip the trade now the second method is using trailing stop losses and unlike the price projection technique a trailing stop loss does not have a fixed profit Target instead you Trail your stop loss as the price moves in a favor so you can write the entire Trend now you have to decide on the type

46:19 of trend you want to capture whether it's a short term medium term or long-term Trend and you trade your stop loss with the appropriate moving averages for example a 20 moving average can be used for a short term 50 period moving average for a medium term and 200 period moving average for long term Trends then exit your trades when the price closes Beyond or above the moving average so if you want to capture a price ring in the market the price projection technique makes sense and if you want to write Trends in the market then trailing stop loss works best now moving to our fourth category of patterns the rectangle patterns the rectangle formation is a classical chat pattern established by horizontal lines which represents the important support

47:04 and assistance now this is a continuation pattern that forms a trading range during a pause in the current market Trend it is quite easy to identify the pattern because it has at least two comparable highs and two comparable laws these highs and lows can be joined to make two parallel lines that form the top and the bottom of the rectangle now a rectangle formation shows a period of indecision between sellers and buyers as they take turn throwing punches at each other but neither of them have the dominance over one another so the rectangle patterns are also known as trading ranges or concession areas or consolidation zones in this case we are talking about continuation patterns so we expect the price to break out and continue with the original Trend so in that sense there

47:51 are two types of rectangles the top rectangle which is formed during an upward price move it signals the continuation of the uptrend the next rectangle is formed during a downtrend and is called as a bottom rectangle which signals that the down move will continue after the breakout now the rectangle patterns can also reverse the trend so these reversal patterns are given specific names like double top and triple top when the price tests the resistance twice and Thrice respectively and then moves lower the other category is double bottom and triple bottom where the price test the support level twice and thrives respectively and reverses upwards so in order to clearly understand what the pattern is about to do we have to wait till the breakout happens so it is essentially a confusing

48:38 piece of price action if you try to learn this pattern by heart what I recommend is to wait for the price to give a real breakout and then decide if you want to trade with the trend or against it so in short in order to identify the rectangle pattern we will need to locate a trending stock that is having a period of consolidation and there should be minimum two tops and two bottoms that are horizontal to one another which will act as the rest distance and support levels as I have mentioned the top rectangle is seen during an uptrend you would need to notice a breakout through the upper level of the pattern now this will confirm that the bullish move is coming back and Traders can look to under long positions when the pattern forms a break up with the resistance level to continue

49:24 with the bullish Trend while the bottom rectangle pattern is the total opposite of its bullish counterpart this pattern occurs during a downtrend and the price would need to break the lower support level of the pattern to confirm its presence and Traders can look to under short positions when the price breaks the bottom of the range to continue with the bearish trend now how to trade when you see a rectangle pattern for a top rectangle pattern you can enter a long trade when the price breaks above the resistance level if you are an aggressive Trader looking for the best price to take an entry the downside is that it could be a false breakout and you can get stopped out the next approach is more conservative where we will be paid for the breakout candle to close above the resistance level most

50:09 often this method will reduce the chances of getting trapped in a fake out but the only limitation is when the price breaks out with huge momentum and you will now be buying at higher prices and finally what if you miss out of the breakout completely then the only option available is to wait for a pullback or retest back to the resistance turn support level and take an entry from there and if the rateest doesn't happen don't chase the price just avoid trading it all together you'll find even better trades make sure that the volume Rises during the breakout indicating a higher buying interest you can also use indicators like macd RSI Etc to do the same and for a bottom rectangle pattern with a bearish breakdown our primary Instinct should be to sell now here are

50:55 the three entries possible the most aggressive is entering as and when the breakout happens the more conservative approach is to wait for the confirmation after to the close of the breakdown candle below the support level the final option is to wait for a rate test in case you missed the breakdown so I leave it up to you to decide make sure you validate the breakout with volumes and momentum based indicator each and every time now we will learn to set up proper stop loss we don't want the stop loss to affect our risk management so when you notice a rectangle breakout you have to measure the distance between the support and resistance and then place your stop loss in the middle of this length this is applicable to both top and bottom rectangles now your trade will be

51:41 secured by doing this and you will be aware that the maximum you can lose from this trade is equal to half the size of the pattern now after buying or selling on the rectangle breakout pattern the stop loss should be placed at the midpoint because the breakout will likely to have shakeouts before continuing with the trend thus if you put your stop loss at or just below the breakout Point smart money will probably your stop loss before beginning to run with the trend now how to exit a profitable trade when trading the rectangle pattern there is a clearly stated rule about the minimum Target you should remain in your trade for a minimum price move which is equal to the size or the width of the pattern this implies that the distance between the support and resistance of the triangle should be placed on the chart beginning

52:27 from the breakout moment now since the stop loss is at the midpoint of the rectangle range it means that the target is twice the size of the stop loss this enables a reward to risk of 2e's to 1 from the offset you can also use the railing stop loss method if you want to write the trend until it's exhausted there is yet another way in which Traders can successfully trade rectangles and that is by buying at the support and selling at the resistance levels if the width of the rectangle pattern is very high now this can be used as an intraday or swing trading strategy if it provides a sufficient reward to risk ratio so for a top rectangle pad button you can take along and read from the bottom support level and place your stop loss below the lowest Wick or candle formed during the

53:13 consolidation and the target will obviously be the next resistance level similarly for a bottom rectangle pattern you can look too short when the price reverses down from the top resistance level and place your stop loss above the highest Wick or candle that is formed during the consolidation the target is obviously the lower support level now let's jump into the final category of patterns first of all I will talk about the cup and handle pattern the reason why I have kept the cup and handle pattern for the last is that there is still an ongoing debate as to whether the cup and handle pattern is more of a continuation pattern or a reversal pattern in my opinion the cup and handle pattern can be both a continuation and a reversal pattern now it depends on where it is formed in the chart if it is

54:00 formed during an uptrend then this pattern indicates a bullish continuation like likewise if it gets formed during a downtrend the pattern will indicate a bullish reversal now I am not actually curious about where the pattern forms but I'm more interested in the fact that the breakout always occurs towards the upside that is the cup and handle pattern is expected to give a bullish breakout now let's dive into the finer details the pattern comprises of two parts as the name suggests a cup and a handle and also a neckline which will act as the resistance the cup forms after a bearish price decline which is followed by a period of consolidation with smaller or weaker candles that shows signs of the market bottoming

54:45 after which the price makes a higher high towards the resistance which indicates that the Bulls are taking over from the beers gradually now it looks like a bowl or an object with a round bottom and the volume should decrease towards the middle of the pattern which is during the consolidation and then rise towards the up which indicates an increase in the buying pressure how the price reacts at the resistance is important because it tells you whether there is still selling pressure available at the resistance now a cup and handle pattern becomes invalid if you see a large sell-off from the resistance level as it tells you that the selling pressure is still available there and the market is not ready to head higher but if you notice that the price is holding up nicely at the

55:31 resistance then it is a sign of strength as it tells you that the buyers are willing to buy at higher prices so the handle has to form a tight consolidation or build up under the resistance level at this point many Traders would do what they have learned from many trading books that is price is at the resistance and it is time to go short now that's fine if the price has made a strong momentum move into the resistance and it got rejected strongly from there but if the price approaches the resistance and forms a build up or even if it makes higher lows into the resistance then you have to to be very careful because this is a sign of strength which is telling you that the buyers are willing to buy at these higher prices and the last thing you want to do is to short the market because it's likely to break out

56:17 higher so the handle has to give a tight consolidation which can be in the form of either a bull flag pattern or a bull pen and pattern which by themselves are bullish continuation patterns now moreover the volumes should decline during the consolidation indicating a lack of selling pressure also keep in mind that the handle has to be smaller than the cup and it should not drop into the lower half of the cup and ideally it should stay in the upper third of the cup the deeper the handle moves down the less likely the market will break out higher now the handle is the last bearish attempt to push the prices lower and when it fails and the prices breaks above the handle we can expect the market to rise now let us take a look at the entry stop loss and Target criterias

57:04 the first cup and hand confirmation comes when the price breaks above the tight consultation range so this is the most aggressive and cheapest entry price that you can find but since there is a resistance level above it the price could just reverse and hit your stop loss so an alternative entry is to go long on the breakout above the neckline this is the second best price you can get an entry end but there is still a danger of a false breakout in this method and if you are more conservative you can wait for the breakout candle to close above the neckline and then take a long entry on the next candle above the breakout candle Heist however sometimes the market closes much higher and you will have a poor reward to risk ratio now this will result in a wide stop loss

57:49 and a smaller position sizing on your trade and in such instances you can wait for the price to do a ShakeOut in the form of a pullback or retest pack to the neckline and you can plan to enter when the price reverses higher now make sure to validate if the breakout is Real by use using volumes and other momentum indicators another point to note is that the cups that have longer and more u-shaped bottoms gives a better signal and it is better to avoid the cups with a sharp v-shaped Bottom now the second question is where should I set my stop losses now whenever you place a stop loss it should always follow this thumb rule your stop loss should be placed at a level where if the market reaches it your trading setup is invalidated now ask yourself when will a cup and handle

58:35 pattern becomes invalid a cup and handle pattern invalidation comes when the price breaks below the handle of the pattern now this top loss setting is same as in the case of a bull flag or a bull pen and pattern now you don't want to put the stop loss at the exact low of the handle because the market could trade into that area of value and then reverse higher so instead give it some buffer below the handle like 180r below it and finally how to exit your windows the first method is obviously the classic price projection method here we measure the height of the cup from the bottom of the cup to the neckline and then project it from the breakout point above the neckline this will be your future profit Target now the second method is to use moving averages to

59:22 Trail your stop loss and write big trends so in a trending Market the price can remain above the moving average for a long period of time and you will only exit when the price closes below the moving average moving on to the final pattern of this video the inverted cup and handle pattern if you flip a cup and handle pattern upside down you will get an inverted cup and handle pattern this is a pattern that gives a bearish breakdown depending on where it is formed in a trend it can be a bearish continuation pattern or a bearish reversal pattern but we are least interested in where it forms but we are more interested in the bearish breakdown that it provides the formation of the inverted cup shows a depleting demand and a lack of buying pressure which can

1:00:07 be validated by using the volumes now the handle should be a tight consolidation in form of a beer flag or a beer pennant which also comes with Contracting volumes now if the handle moves way higher beyond the 50 percentage of the cup then it is better not to consider it as a valid pattern since there is enough buying pressure still available at the neckline or the support level which is pushing the prices higher the entry criteria are to either take a short trade when the price breaks below the handle of the consolidation or when the price breaks below the neckline and a more conservative entry would be below the low of the breakdown candle after the breakdown candle closes below the support level and if you have missed out on an entry you can wait for a price pullback or retest back to the neckline

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