Introduction To Basic Chart Patterns

Introduction to basic chart patterns

As an options trader, it is essential to be able to read and interpret charts. Are prices pointing to the upside or the downside? Are prices going to stagnate over the medium term? These are questions that option traders ask themselves all the time. Technical analysis should also be used with fundamental analysis. Fundamental analysis will give a reliable picture of a company’s financial health in the long term. Technical analysis on the other hand will help one determine entry and exit points for the short term. Technical analysis will also help an option trader to determine whether a financial security is poised for a breakout or a reversal.




In this section, we will discuss relevant chart patterns such as:

Continue your stock options journey!

  • Basics of Chart Patterns Basics Of Chart Patterns As an options trader, it is essential to be able to read and interpret charts. Are prices pointing to the upside or the downside? Are prices...
  • Consolidation Chart Patterns – Pennants A pennant is a charted pattern where lower highs and higher lows are formed. Eventually prices converge and break out occurs in the direction of the prevailing trend. A sure...
  • Consolidation Chart Patterns – Triangles The triangle shown here shows a break towards the upside. The triangle shown here shows a break towards the downside. Triangles are classified as consolidation chart patterns which are formed...
  • Consolidation Chart Patterns – Flags Consolidation chart patterns – Flags A flag is a chart pattern that involves the interruption of a prevailing trend before resuming its course. It consist of prices trading between parallel...