hello traders its a samurai trade here welcome to this training session in this
session I'm going to be discussing chart patterns specifically ascending and
descending triangles learning how to incorporate chart patterns in your
trading and to recognize these patterns as you trade will improve your bottom
line dramatically so as we get underway I do need to put the risk disclaimer up
if you haven't read one of my risk disclaimers please pause the video there
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come across end of advertisement let's now get into the education side of it
first of all I just need to remind members that in the members area under
the trading a book section there are four or five excellent books there or
reports or chart pattern examples so please visit the members area to review
the books on trading chart patterns so as you've probably heard me say on
previous recordings day and swing trading is really a pattern solving
exercise virtually every trading setup that we trade whether it be the t1
a t2 the 19 at t3 they're all patterns that patterns geometric
patterns that appear in the market each and every day now will quite often use
indicators with some of those others are purely
visual now when you're using or drawing in trend lines it'll make it easier for
you to recognize other patterns that appear in the market such as ascending
and descending triangles and as you're about to see they're very easy to learn
but can be very very profitable so drawing in trend lines as you trade and
learning to recognize patterns as they set up can it really help you catch the
big moves now developing the habit of drawing in trendlines as possible
patterns as they form give you a major advantage over the majority of traders
in the market what I've got there on the chart there we can see we get a flagpole
a pennant a falling wedge and what you'll notice
with pennants and falling wedges you'll notice the narrowing of what we call the
trading range the energy is building up and with many of these you'll have an
explosive breakout so chop patterns give you a visual clue of where the market is
heading when you use them in combination with technical indicators to confirm
existing signals can dramatically improve their win-loss ratios now I
really recommend this try it just to learn one or two of the major patterns
such as ascending and descending triangles or double tops and bottoms
before attempting to identify some of the more complex patterns when you look
at and review some of the books on patterns you'll see there's literally
dozens of them and dozens of different types of formations etc so if you try to
take them all in at once it can be a little confusing so really focus on just
a couple and the ones I recommend are really the triangles and the double tops
and double bottoms they're probably two of the most profitable patterns that
appear in the market in basically every market every day with your trade Forex
futures or stocks so chart patterns when use of common sense can give your
trading an edge and an edge is all you need to make money let's talk about very
quickly drawing of trend lines because what I want you to do is as you trade is
to be drawing trend lines in so technical traders use trend lighted
lines to identify trend direction levels of support and resistance now I'm going
to do a separate video on channel trading and using channels because we
could easily devote another 30 minutes just talking about Channel so I'm going
to do a separate video on that one but there is a right and a wrong way of
drawing trend lines and this is what I recommend is that you may notice a
diagram on the right there and the green circles if any of you have viewed my
video on fractal points you'll see their actual fractal points now to make it
simple a fractal point is when you have to higher candles or lower candles on
either side so the ones up top here we can see we've got two high candles two
high candles if you want to make drawing of trend lines and patterns very
mechanical aim for the fractal points it just makes your trading very very
mechanical in nature if you do that now what it comes down to is it ascending
and descending triangles are really triangles and wedges combined and
they're very very close together so you'll see that as we as a narrow price
action is getting tighter and tighter which is really a narrowing of the
trading range and they're really continuation patterns now they don't
always work out that is we say that with an ascending triangle we're expecting a
break to be alongside these sending to the short side well it's probably 60%
right but you'll quite often see it trades the other way and that's where at
least if you're prepared for a breakout or you know that the energy is building
you can be prepared so what you're really looking for is these key points
as they come together you just want to be prepared also though that it may
break out before the point actually intersects so you'll soon get used to
that once you recognize them so when we see a descending or ascending triangle
forming we know with a high degree of certainty that the market is built
energy for the next move or break out the market is entered a trading range
and is narrowing learning to recognize and trade these patterns in real time
allows you to prepare to enter a trade well in advance if you're a day trader
of course time is not on your side normally that is when you get a breakout
you get a breakout and sometimes if the market has been coiling it's a very fast
breakout and as I point out in the bottom slide here a high percentage of
descending and ascending triangle breakouts result in an extended or
explosive move so it can be very very profitable so ascending and descending
triangles the ascending triangle is a variation of a symmetrical triangle
ascending triangles are generally considered bullish and a most reliable
and found in an uptrend the top part of a triangle appears flat while the bottom
part of a triangle has an upward slant and you can see there's basically two
triangles here within the one that is you can see a smaller one you got the
bigger picture and you've then got a smaller one forming now I must say also
when you pattern we're a triangle or a double bottom or double top it
really doesn't matter close enough is good enough they don't have to be
perfect so just be aware of that now if we take the descending triangle it's
also a variation of a symmetrical triangle it's generally considered
bearish and is usually found in down trends unlike the ascending triangle
this time the bottom part of a triangle appears flat now I'm going to show you a
couple of quick snapshots from some charts in a moment and these flat areas
quite often they might be a pivot point or a floor pivot so quite often you'll
see there you've come down you've bounced off the pivot tested it three or
four times before finally you get a break but what you want to be aware of
too at times it will go down and test the floor pivot two or three times maybe
four or five and then break to the opposite direction as well because the
sellers just don't follow through but the advantage
irrespective of which direction you have the breakout you're prepared because you
know the energy is building now here's an example where patterns don't have to
be perfect so you can see with the upper trend line heading down that there's a
variance of a couple of ticks between the highs and on the low the flat trend
line we can see there that extended over to be left it's within a tick so it's
not perfect but you've got the formation of a triangle setting up now that was an
$80 move now just drop to $80 a ticks this is on CL itself then it bounced the
other direct in the other direction here is one where it bounced straight away in
the opposite direction so rather go to the short side which this formation
generally has happened it bounced to the long side but you were you were prepared
for it because you could see price action narrowing the energy was building
and of course you're aware that you can get a breakout to either the long side
or the short side so you're prepared for it here we've got a quick $100.00 move
we can see here that we had support over one two three over seven or eight
candles coming down hitting our lower trendline and we could see a narrowing
of price action so what we see is a narrowing of the trading range and we're
well prepared now for our members here you would have used our 34 bounce to
enter this particular trade in actual fact is a couple of opportunities there
with the 34 bounce prepared being prepared for it now it's a little bit
like when you're trading floor pivots what you've got to be very cautious of
is trading up against support that is shorting when you write its support
ideally you want to be buying when you're at support but this is something
we teach in a day traders fast-track program but I think hopefully with these
patterns you starting to get the general idea
now the black dots by the way are fractal points so I have an indicator on
my TradeStation platform the plots applet are the black dots
as a fractal point and it just makes it easier when you're drawing in trend
lines so you've then got wedges now wedges are a little different of
course to the pennants to flag sorry to to the pennants and to the triangles but
they're all similar type the similar outcome what you can see here is they're
rising and ones falling and of course pressure is building as they get closer
so once again in some of the books we have on our website we're going to they
go into great detail some of these various patterns so traders that's the
end of this video so it was a very quick 40 minute rundown on patterns and of
course we could spend hours running through these patterns so the next video
I'm going to do is on trading channels and we draw channels in every day as we
trade particularly on our high time frame on our anchor chart because by
drawing in a channel on our anchor chart very very quickly we can glance over to
right where we have our anchor chart situated and we can see immediately what
direction the overall higher time frame is heading in so once again if you
haven't subscribed to my channel please do please visit my website for more
information about the day traders fast track program thank you very much