Signal Patterns Versus Trends

A price pattern tends to be short term in nature and points to the immediate tendencies of price. For example, a double top or double bottom strongly forecasts reversal in the current level of price, and these are especially compelling when occurring at resistance or support levels. However, they reveal only what is occurring with the immediate price strength or weakness.

Key Point

A price or signal pattern is an immediate indicator of change, but not always a sign of trend reversal. It might indicate a move within the current trend’s breadth.

The same is true for candlestick signals and even for momentum oscillators, moving averages, and volume levels. All of these, by themselves, relate to price patterns and ...

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