The professional technician has a vast toolbox to analyze the market. Selecting the right indicator, knowing how to apply it and then monitoring it to ensure continued and applicable functionality is a learned and lengthy process. That said, that doesn’t mean that those who trade cannot use simple recognition patterns to achieve tremendous profitability and success!
Let’s take a look at AT&T’s (T) chart as we put this idea in action.
The circle drawn demonstrates a Bearish 2 Bar Reversal and is for December 3rd and December 4th price action. This simple pattern, as its name states, is a reversal signal. In this case, it is formed over 2 days and represents a pullback in the uptrend that started in Mid-November. The psychology behind this reversal pattern is a battle between Supply & Demand, where price action rejected those traders who believed that the Mid-November uptrend would continue.
What’s important is that traders who were in a position and those who wished to short it, had this warning signal to base their analysis on and to make the appropriate changes. As of December 10th, those traders that did recognize this pattern and adjusted their positions, saw a quick decline and potential start of a new downward trend. The question is: HOW do you learn to recognize these basic trading patterns? And HOW do you trade it? I can help you answer that through consultation; contact me today!
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