hey traders how's it going thanks for checking out this video my name is Travis from master
the market and this is going to be a quick video talking about three chart patterns that
in my opinion every day trader swing trader and realistically even every long-term trader should
know of and should be on the lookout for now very quickly before getting into the chart patterns
themselves it's also very important to kind of understand the foundation of these chart patterns
which is going to be the candlesticks themselves now we actually have a full video talking about
candlesticks in much more detail and going over some candlestick patterns so i'm going to go ahead
and link that down in the description for you to check out after you finish this video but kind
of just to give you the basics of candlesticks they're going to be made up of four main points
and those points are going to be an open a high a low and a close now of course we know that the
candlestick is going to be green if the open price is lower than the close price meaning that it went
up within the period that the candlestick was open and it's going to be red if the opposite is true
meaning that it opened at a higher price than it closed and the price of the stock went down
within that candlestick's time frame now that main colored section of the candlestick is going to be
known as the real body and there's going to be a line sticking out from the top and the bottom
of the real body which are going to be known as the upper in the lower wicks simply telling us
the highest and the lowest points that the price went within that candlestick before it closed now
that means that this can tell us the open the high the low and close for any period of time really it
can be over a one minute period it could be over a five minute period it could be over an entire
hour an entire day an entire week and that's going to be dependent on the time frame of your chart so
for example if we take these three charts here on the screen on the left we have the one day chart
in the middle we have the one hour chart and over here on the right we have the five minute chart
all of these are looking at the same stock just on different time frames and the reason that i wanted
to bring this up is because if you see some kind of chart pattern forming on a longer term time
frame such as the one day chart most likely that chart pattern is going to take a much longer term
to actually play out than something forming on the five minute chart or even the one hour chart
and because of that a chart pattern on the one day chart is probably going to be used for some kind
of longer term trade such as a swing trade whereas any kind of chart pattern forming on the five
minute chart or the one minute chart something very short term is probably going to play out
over a much shorter period of time and because of that it's going to most likely be best to use that
as an indicator for a potential day trade but i wanted to just mention this because you can
use any of these chart patterns for any kind of short-term midterm or even long-term trading style
it's really just going to depend on the time frame that you see the chart patterns forming on
so anyway with all of that being said the first chart pattern that i want to talk about
is one that i'm going to call the panic balance pattern this is actually something
that i don't see a lot of information on on the internet so i wanted to share this because
it's one that i use almost every single day actually in my own personal trading
and is actually a really great way to trade stocks that have a lot of upward momentum without having
to chase them all the way at the highs and the way that this works is you're looking to actually dip
by these momentum stocks at a previous level of resistance or at a previous peak or high
and the reason for that is simply because past levels of resistance once they're broken often
become a new level of support and vice versa path levels of support that are broken often become a
new level of resistance so by waiting for these stocks to actually break out over these resistance
levels and then pull back to that newfound level of support you're going to prevent yourself from
buying immediately as the stock breaks out over resistance which at the end of the day is going
to be a much more accurate way to trade these breakouts and it's going to prevent you from
buying into false breakouts which is exactly what causes so many new traders to buy stocks as
they're breaking out at the high before they come straight back down below that resistance level
so as a quick example here if we take ocgn this was a big runner over the past week
and we're looking at the one minute chart so this is of course what you would see
as a very short-term trader obviously right off the bat you can see that this is a very strong
chart with a lot of upward momentum but if you're watching this in real time it's of course going to
be much more difficult to kind of determine where exactly you should buy into this stock so by using
this panic bounce strategy there's actually a few really good examples here where you can wait for
the stock to break out and then look to buy at that breakout level once it turns into a level
of support and the first of those is going to be right here at about 11 per share you can see that
it spikes up at the market open it seems to form a peak and starts to pull back below that level
however it does end up breaking back above that past peak or that past resistance level which is
exactly what we're looking for for this strategy but instead of immediately buying into this peak
because many times like i said that ends up being a false breakout and many times we see these
stocks come straight back down after doing that you want to let it kind of play out and do its
thing uh it spikes back up and then wait for that pull back to that past resistance level to now
become a level of support and that is exactly what we see happen here on a few different occasions
these would both be really good opportunities to buy into this newfound level of support
and later on actually in the day kind of the exact same thing ends up happening
with this peak that we have up here the stock ends up breaking above that past peak it starts to kind
of consolidate above that starting to form a new level of support and from there it starts to run
up and squeeze higher and higher the next pattern that i want to talk about is another one that i
don't see many people mentioning but it leads to a lot of really good reversals in the market
so it kind of can really help you buy at the lows and sell at the highs which of course is exactly
what we want to do when we are trading stocks and this is going to be an exhaustion pattern
and more specifically a volume exhaustion pattern essentially what happens in this case is when the
volume becomes quote unquote exhausted after a very strong move to the upside or to the downside
indicating a reversal to the other side volume exhaustion can simply be spotted with an unusually
large spike in the volume and to kind of explain what i mean by exhausted i wanted to give a quick
analogy if you think of a stock that is trending up as a person that is jogging in theory somebody
that's jogging can kind of jog at a pretty steady pace for an extended period of time right but as
soon as they start to sprint and they start to go 100 percent inevitably they're going to become
exhausted and they're going to need to slow down or even completely stop and kind of the same thing
is true for a stock that is trending upwards it can trend upwards at a nice slow and steady pace
for a pretty extended period of time but as soon as it starts to go parabolic and really
starts to quote-unquote sprint along with the volume starting to sprint as well inevitably
all of the buyers are going to be exhausted the demand for the stock that was pushing the price
up is going to slow down and inevitably that's going to lead to a pullback or even a complete
reversal to the downside so if we take aez for example another big runner over the past week
you can see this is a pretty good example of volume exhaustion because we have a stock that is
pretty slowly trending up throughout the day it's already up pretty significantly from the previous
day close which was about one dollar and ten cents and it's trending at about one dollar and
forty cents throughout the morning um and you can see that it eventually starts to really pick up
and go kind of parabolic and once we see these big spikes in the volume that is essentially when the
stock is starting to sprint and again this pattern can be a really good indicator that the stock is
going to pull back or even completely reverse to the downside and that's exactly what we see
start to happen here with aez so if you were using this in real time if you were in a position
when you were looking for a potential area to lock in your profits looking for these
volume exhaustion areas can be a really good way to help you sell at the top of a move
alternatively if you want to actually profit from these stocks reversing to the downside
you could look to potentially short sell up here as this becomes an exhausted level and then you
would actually profit as the stock comes back down and the same is of course true for the other side
of the spectrum if this happened to be a stock that was kind of trending downwards and then
started to really sell off to the downside with a big spike in volume that would be known as cellar
exhaustion so you can use that information to help you buy down at the bottom of a move before
a stock is ready to bounce back up okay and for the third pattern that every trader should know of
in my opinion this is one of the most valuable patterns that every day traders swing trader
and even long-term investors should know of and this is the bull flag pattern uh one that you've
probably heard of if you've done some research on chart patterns in the past this is definitely
one that is much more well known than the panic bounce or the exhaustion patterns that we just
talked about but in my opinion it's for good reason because this is a very valuable pattern
and is one that is probably seen more commonly than any other pattern in the market and what
this pattern is is a bullish continuation pattern that's going to really help you take advantage of
upward momentum in the market and it's going to be another one to help you buy breakouts in a stock
and essentially what this pattern is and how it forms is after a stock spikes up instead of
that stock pooling all the way back down if it starts to kind of consolidate up at its highs
and you notice that the price action in the chart is starting to get more and more narrow over time
that's exactly what this bull flag pattern is going to look like and that can be an indicator
that this is going to continue to break out meaning that you can of course use it to buy into
the stock and profit from that continued breakout to the upside so if we look at arya on the one
minute chart again this was another big runner over the past week obviously hindsight is 20 20
so looking at this now you can see that there were plenty of opportunities to buy into this stock
but if you're watching it in real time it is much more difficult to spot a good entry point
for this stock that's why keeping an eye out for any of these patterns that are forming is a really
good way to actually get started trading with some kind of plan and with some kind of strategy
so if you are looking for the bull flag pattern again what you want to see is a strong move up
followed by price action that is starting to get more and more narrow eventually breaking out
and continuing to the upside and there is pretty much a picture-perfect example of this happening
here with arya you can see that we get our initial bullish move to the upside
the price action starts to kind of bounce around within this level of resistance and support
until eventually the price action gets so narrow that it either needs to break out
or break down but in this case it does end up breaking out to the upside and continuing on with
its run throughout the rest of the day so the way that you would look to buy this bull flag pattern
is to one you can of course wait for that breakout over resistance and look to buy that breakout over
the next couple of candles or another way that you can actually trade the bull flag pattern is
to look to actually buy into the pattern itself right above this level of support but the very
important thing to keep in mind about this way of buying into the bull flag pattern is that this
pattern is actually not going to be a confirmed bull flag until it actually breaks out above that
resistance and starts to continue higher so if you were watching this in real time and you decided to
buy above that trendline support because you're expecting and anticipating a breakout of the bull
flag pattern at this point it's not going to yet be a confirmed bull flag pattern so most likely
you're going to have a little bit lower accuracy by buying before that pattern is confirmed
so in my opinion your best bet is to simply wait for the pattern to completely form wait
for it to actually be confirmed by this breakout above that level of resistance and then look to
buy over the next couple of candles to then be able to profit from this continued bullish move
okay so those are the three patterns that in my opinion every trader should know of i hope
you enjoyed the video and found these helpful i wanted to include a few that i don't see many
people talking about instead of just including all of the most common chart patterns in this video
so if you found this helpful please make sure to give the video a like and subscribe to the
channel so you don't miss out on future videos um and of course if you're interested in learning
more about day trading swing trading and even long-term investing as well as have access to
our exclusive market resources in our trading chat room with over a thousand active traders
in it daily all of that can be found on my website master the market which is going to be linked down
below in the description but anyway until the next video thanks for watching and good luck with your
trading
you