2. Traditional Analysis—The Power of Pattern Recognition

One key to effective charting is found in the type of price pattern itself. Ease of recognition makes it possible to spot signals, especially reversals. The same rule applies to traditional price patterns as to candlesticks: The most compelling signals should be emphasized, as they provide the best experience of forecasting coming direction.

This means that, like candlestick indicators (so-called Eastern indicators), traditional price patterns (Western indicators) are subject to the same qualifications:

Image Strong signals. A short list of exceptionally strong signals should be emphasized over ...

Get Profiting from Technical Analysis and Candlestick Indicators: Powerful Methods for Accurately Timing Trades now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.