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Trading Tutorials

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The expertise of TraderPlanet analysts span global markets, diverse trading approaches, and basic to advanced concepts.

Below you will find an exclusive collection of free, online tutorials for your reading enjoyment. For traders that prefer visual instruction, a vast variety of multimedia selections may be found within the videos and webinar series.

Diamond Patterns

A reversal pattern that is relatively rare – or perhaps envisioning it is just more uncommon – is the diamond pattern, formed by a series of prices that rally into a high, drop sharply, then rally again but fall off quickly to leave a more or less isolated pattern at a market extreme. The breakout can produce a sharp turn in prices such as the gap lower move on the chart below. 

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Rounding Bottom or Cup-and-Saucer Patterns

Not all price patterns produce sharp, distinctive turns in price direction. It sometimes takes time for a top or bottom to emerge gradually over a number of price bars/candles. These patterns include the rounding bottom or the cup-and-saucer (although it really should be the saucer-and-cup formation in the chronological sequence). These patterns are generally associated with bottoms but may...

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Ascending and Descending Triangle Patterns

Descending Triangle Another triangle pattern that could turn into a reversal pattern, either to the upside or downside, depending upon your time frame, is the descending triangle. To illustrate that price patterns form over multiple time frames, the chart below shows a succession of lower highs on a weekly chart forming a downtrend line but with lows stalling around 80 to form the flat side...

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Rising and Falling Wedge Patterns

Rising or falling wedge patterns are modifications of a triangle and can also lead to price reversals. As with the triangle, prices move into a narrower and narrower range as the pattern progresses, looking somewhat like a coil. In a rising wedge, the price highs do not advance as much as the price lows.  When the uptrend line along the lows does give way, prices tend to spring out to the...

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Head-and-Shoulders Formation

Like some other patterns, a head-and-shoulders formation may be part of a larger continuation pattern, but it often indicates a change in market direction when the neckline of the pattern is penetrated. This pattern involves several highs and lows, forms over a period of time and may be used to make price projections after a breakout. In the head-and-shoulders bottom shown, prices descend to...

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"M" Tops and "W" Bottoms

A close cousin of the double top and double bottom are the M top and W bottom, so-called because of the letters formed when the thrust to a previous high or previous low does not reach the same level as the first high or low. The key that confirms a price reversal is a break above the interim high on the W bottom and a break below the interim low at the M top. The interim highs and lows can...

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Double Tops and Double Bottoms

Double Tops A previous high may act as a target for a new move to the upside or as a barrier that an uptrend may not be able to penetrate. If this resistance holds and prices turn back, the price reversal may form a double top and makes that price area a more formidable barrier to exceed in the future. Double Bottoms A mirror image of the double top is the double bottom: Prices drop to the...

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Reversal Patterns

While a continuation pattern suggests that a trend in place will continue in the same direction after a brief pause/correction, a failed continuation pattern may well turn into a reversal pattern. Like their name implies, reversal patterns suggest that one trend is ending and the market is ready to begin another trend in the opposite direction or, perhaps more likely, to move sideways for a...

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Gap Patterns

Gaps are areas on a price chart where no trading occurs. The last bar's low is higher than the previous bar's high for a gap-higher move. The last bar's high is lower than the previous bar's low to form a gap-lower move. For example, if a market closes at 100 in one session and then opens at 105 in the next section, a 5-point gap would be evident on a chart. With electronic trading 24 hours...

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Pennant Patterns or Triangle Patterns

Sometimes continuation patterns take a form that can best be described as a symetrical triangle or pennant. Using the same chart below as the bear flag example, note that various forms of triangles can also appear as short-term corrections or congestion areas in an ongoing trend. The price ranges in a triangle tend to get narrower and narrower as prices move toward the apex of the triangle....

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