Visual Guide to Chart Patterns

Pattern Recognition Made Easy

While working at Tandy Corporation, I hung on my office wall a price chart of the company’s stock. I did not know if the head-and-shoulders top I found was one or not, but it looked like a person’s head in the middle of a pair of shoulders. To the left and right of that pattern, price dropped back to earth, making it seem like the pattern was a ghost rising from a moat.

That was my first attempt at finding a chart pattern. Since that time, I taught myself to recognize chart patterns—a skill almost anyone can learn. Let us begin looking at a few charts to see how to recognize patterns.

The Empty Chart

The empty chart ...