Visual Guide to Chart Patterns

Basic Buy Setups

This chapter begins looking at chart patterns as trading tools. Now that we can identify chart patterns, we can use these tools as signals to help time our entry into the markets.

The basic setup rules are the same for most of the chart patterns we have covered. Here they are.

Setup Rules:

1. Place a buy stop a penny above the top trendline to catch the upward breakout.
2. Once into the trade, place a stop a penny below the bottom of the chart pattern.

Notice the absence of moving averages and other indicators. Simple is best.

I tested this setup on most of the chart patterns in this book and discuss those results later. Here are ...