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CHAPTER 6:
Consolidation Chart Patterns to Know
any new traders who are first getting started with technical
analysis often have a hard time seeing the less obvious signs
that are pointing them towards
various positions regarding
their desired underlying assets which can lead to them missing out on key
trades as the moment comes and goes without their notice. What these types
of traders are often failing to take into account is that there is no single right
way to trade which means you will want to learn about many different types
of chart patterns if you hope to use technical analysis to bring in the profits
you have always dreamed of. While there are countless types of technical
indicators that you could consider, the following are the ones you should
get
familiar with first, before expanding your horizons as desired from
there.
In order to ensure each effort is as effective as possible, however, you will
want to ensure that you have a clear understanding of the benefits of the
patterns you choose in addition to being familiar
with their strengths and
weaknesses. A chart pattern is any one of a variety of different metrics with
a value that is directly tied to the current price of an underlying asset. The
goal of all chart patterns, then, is to show the direction the price of an
underlying asset is going to move as well
as what the extent of that
movement is likely going to be. This is done through a mixture of analyzing
past patterns and determining how and when they are going to repeat
themselves in the future.
Instead, they are focused completely on price movement which makes them
especially useful in the short-term and ends up losing some of their
usefulness in the long-term as they typically lack the breadth of data that is
required to be useful in long-term concerns. This then means that long-term
investors are more likely to use technical
indicators as a means of
determining the right entry points to take advantage of, along with the right
exit points to have in mind to avoid serious losses that were seriously
preventable.
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