Technical Analysis Made Simple: Trading Stock Chart Patterns | James Nguyen | Skillshare

Technical Analysis Made Simple: Trading Stock Chart Patterns

James Nguyen, Professional Money and Lifestyle Manager

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11 Lessons (38m)
    • 1. Class Introduction

      4:01
    • 2. Introduction to Chart Patterns

      1:31
    • 3. Flags and Triangles: Bullish or Bearish?

      4:57
    • 4. Head and Shoulders, Cups & Handle and Double Bottoms

      4:58
    • 5. Why Chart Pattern Interpretation is Tricky

      3:42
    • 6. Applying the Stacking System 2 Cs

      2:17
    • 7. Tips on Chart Pattern Recognition

      3:25
    • 8. Trading Walkthrough: Buying WEED

      2:17
    • 9. Trading Walkthrough: Wild Western Digital

      4:36
    • 10. Rapid Fire Trading Walkthroughs

      4:49
    • 11. Bonus: The Next Step in the Stacking System

      1:42
39 students are watching this class

About This Class

How do I read a stock chart?

Stock charts tell a story and those stories are often told through common stock chart patterns. Learning to identify these patterns gives both beginner and experienced investors an edge in making buy and sell decisions.

This class will give you powerful tools to help you get that edge.

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Trading Stock Chart Patterns is an end-to-end guide to identifying common stock chart patterns and making that smart buy or sell trade.

This class is the third in a series that will teach you the essentials of technical analysis and stock trading to help you make smart, profitable investing decisions. You’ll focus on the most important technical indicators and put it all together into a process that I actually use as a professional hedge fund manager. 

My classes are built around my Stacking System, a step-by-step process to analyze any price chart using simple, classic technical analysis.

If you can follow a recipe, you can learn my system. 

Technical analysis will give you an edge in trading, day trading and investing in anything from stocks and penny stocks to Bitcoin and cryptocurrency.

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I'm James and I've been a professional trader and hedge fund manager for over 20 years, trading billions of dollars. I'm active on Twitter using @marketmind3 and on my website marketmindtrading.com. I post trading and market analysis live, where I can't hide and fake my results.

My teaching style is focused on being simple and easy-to-follow. I'm also a big believer in using visual aids and live, video walkthroughs as often as I can, so you can look over my shoulder as I apply my concepts. 

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This class will cover every aspect of stock chart patterns and apply what we’ve learned in live trading walkthroughs:

  • Lesson #1: Class Introduction​
  • Lesson #2: Introduction to Chart Patterns
  • Lesson #3: Flags and Triangles​: Bullish or Bearish?
  • Lesson #4: Head and Shoulders, Cups & Handle and Double Bottoms
  • Lesson #5: Why Chart Pattern Interpretation is Tricky
  • Lesson #6: Applying the Stacking System 2 Cs
  • Lesson #7: Tips on Chart Pattern Recognition
  • Lesson #8: Trading Walkthrough: Snapchat Strong​
  • Lesson #9: Trading Walkthrough: Buying WEED​
  • Lesson #10: Trading Walkthrough: GE Ugly
  • Lesson #11: Trading Walkthrough: Wild Western Digital​
  • Lesson #12: Rapid Fire Trading Walkthroughs ​
  • Bonus: The Next Step in the Stacking System

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Understanding technical analysis will change the way you trade and give you control and confidence over your investments. My course will transform you from a “close-your-eyes-and-hope” beginner to a smart, consistent trader. If you want to learn how to read a stock chart, understand technical analysis and trade with confidence, you’re in the right place.

Transcripts

1. Class Introduction: How do I read a stock chart, whether you're a new investor or a season trader, understanding whether a stock charters, bullish or bearish can make the difference between a good investment and a bad investment. And I'm gonna teach you right here. Welcome to technical analysis. Made simple trading Stock chart patterns This class is the third part of a series that will teach anyone how to analyze stock charts. Even if you're a complete beginner, imagine looking at any stock, char and knowing if it is bullish or bearish. Whether it's a buy or a sell. Stock charts tell a story. There's common patterns. There's common formations and set ups to tell you whether a stock looks good and is a buyer a cell. And understanding the stories that Stock Tarts tell is the second step in learning my simple, repeatable process. To analyse a stock index or Cryptocurrency chart and make a smart buy or sell decision, I call my process my stacking system. You'll learn to analyze any stock chart by going through the three C's, looking for a catalyst, a chart pattern and confirmation from technical indicators, and we'll go step by step through each of these concepts. In a previous class called The Power of Trendline Support and Resistance, we went through the catalyst part of the three C's in this class. We're going to go through the chart park and or, in other words, we're gonna look for chart patterns and learn how to identify them. This class will focus on stock chart patterns, how to identify them and what they tell you. Some stock chart patterns are bullish, some are bearish, and we'll learn how to recognize them and fit them into an overall process for trading stocks. Hi, I'm James. I teach people how to read stock charts and trade with confidence. I have 20 years of experience as a hedge fund manager. I've been in front of the screens for decades, trading billions of dollars, and I believe anyone can learn to understand technical analysis. I'm not a paper creator who learned from a textbook. I trade riel capital and post live trading and market analysis on my Twitter and website market mind trading dot com, where I can't hide or fake my results. My process both in how I teach and how I trade is to keep it simple. so you don't have to be a finance wiz or a mass genius to learn how to read a stock chart. If you can follow a recipe, you can learn my process. I've designed my course to be. A series of classes will devote a whole class toe. One aspect of my stacking system that'll lead us dive deep into the most important concepts of technical analysis. Concepts like trendline support and resistance chart patterns and technical indicators along the way will use live video walk throughs in each class to really illustrate each concept. And at the end, we'll put it all together with full live video will walk throughs of all my trading concepts and my full stacking system process in action, this class will focus on the second see in my stacking system the chart in other words, trading stock chart patterns, learning how to identify them and understanding what's bullish and what's bearish. Now if you haven't already completed the 1st 2 classes Thean production to stock charts and technical analysis and the class on trendline support and resistance, you might want to do that right now. Otherwise, let's dive right into trading stock chart patterns this last is going to cover all the basics of stock chart patterns. We're gonna go over the major ones flags and triangles, head and shoulders and company handles and learn how to interpret and identify them. And, of course, we're gonna go through a lot of live video walk throughs. That'll kind of put my stacking system in action, identifying both the catalyst that we've already covered in previous classes. Trendline support, resistance and now, adding to it our understanding of stock chart patterns on going through a bunch of examples to do so if you want to make more money trading or increase profits from investments you're already making or understand what a chart is telling you. So you can stop guessing when you buy ourselves or use long term strategies so you don't have a stair and stress at your trades every minute. You're in the right place right now, and let's begin 2. Introduction to Chart Patterns: what are stocked are patterns. They're basically common patterns found in stock charts that tell a story and give you a sense of whether you want to buy or sell or how that stock chart looks. Ah, and they're everywhere. If you pull a penny stock price chart, you're gonna see common patterns and formations, and each one kind of gives you an indication. And as you learn to read these charts, you'll kind of have a feel and understanding of what that stock chart is trying to tell you . Ah, and that's the key. The key to identifying and trading these patterns is to really understand why they're meaningful and all the words, uh, you know, whether it's, ah, whatever pattern you're seeing. Ah, just identifying is one thing, but understanding what this story is behind each one is justice important. When you start studying char patterns and getting more familiar with them and seeing how often they provide really good, strong indicators of stock price action, you can see why they're important part of my stacking system, right? So trendline breaks, um, will typically provide the catalyst or supporting resistance. Break will typically provide the catalyst of the change that that Ah, that kind of triggers me to watch a stock. Ah, but chart patterns are what What helps to kind of like add to that story. You know, if I can stack both a catalyst as well as, ah, stock price, that's fitting into some sort of chart. Whether it's a bullish, embarrassed formation Ah, it really provides to useful ah signals that in combination can be really strong signals and provide confidence in some sort of buy or sell. 3. Flags and Triangles: Bullish or Bearish?: one of the most common patterns you'll see in a stock chart or flags on, and you're gonna see them everywhere. I'm gonna talk about bold flags first, but bear flags are basically the same idea. Just kind of the opposite. Ah, but basically, you can see here in this diagram. This is kind of the basic formation of a bull flag, right? You have a rally in the stock, and then it's kind of like consolidating channel this flag. Ah, and then a continuation of that rally. You can see it depicted in this stock chart here where the stock prices rallying and they kind of like, produced this channel or this flag formation. And then it was able to establish the rally and continue the rally. So why is this bullish? Why? Why is this pattern so common? Ah, and the basic idea of the story behind it is you have a rally in the stock price, and then the stock price paused, or that rally paused. Ah, and it could be of, you know, whatever reasons you could think of right, buyers start taking profits or they just ran out of steam. And during this channel, period, Ah, the buyers and sellers are kind of battling out with, generally speaking in a downtrend. Ah, so you know, there's obviously there's more selling and it's trending down. But really, Sellers couldn't really overpower the Bulls. They couldn't really establish any kind of impulsive move or any big reversal. It was still, the Bulls were still able to try to rally it. Ah, you know, during this period, so you can kind of view this Maura's a consolidation period and a digestion period of this of this rally. And because it's a bullish formation, you can see ah, once it resolved itself and the bulls were able to overpower the bears. Ah, the rally continued. And so when you see this kind of pattern, the reason it's a bullish pattern is because the other rally you have this consolidation period, Uh, but once the rally continues, the the only take away you can have is that, Ah, even after ah, strong rally and the bears or sellers trying to take over bulls were still able to overpower. So that's normally a bullish signal. Ah, penance or similar flags. The same idea, right? So you have a rally and then a consolidation period. In this case, it's not really a down trending channel, but it's more of a consolidation into a triangle. Ah, where you know, buyers and sellers are battling it out, but ultimately bullish or the bulls kind of took over and buyers established themselves. So again, similar. A bull flag. It's It's a bullish signal, right? Because you have a consolidation and then a continuation of the rally. Ah, bear flags are based on the opposite of a bull flag, right? So you have a decline and in a flag and a channel were basically Ah, you have that consolidation period that digestion, period. And then, in this case, the rally or the selloff continued, right. So bears were able to overpower the bulls. So again, your take away would be That's kind of a bearish pattern. Pennants. Same idea. Ah, you know you have Ah, you know, they have to sell off consolidation and continue to sell off. Similar to flags and pennants. You have just the general idea of triangles. Triangles can kind of take different forms, right? You can have symmetrical triangles. Ah, where you established this range as a pleasure. A channel range you have established a range where there's, you know, kind of like lower highs or higher lows and just kind of wedging into this this kind of a consolidation pattern, trying to figure out what the next move is. Ah, typically, symmetrical triangles can resolve themselves either way. Ah, one of my favorite patterns are triangles that are either a sending or descending. Ah, the idea here is actually better depicted on this. This lower graph right here is that it is establishing into a triangle, but as opposed to, like, kind of a symmetrical triangle, you're making lower highs, but also establishing a really strong kind of level of horizontal support. Eso when it breaks, you have a combination of a stock that was really unable to make higher highs and re establish a trend up at the same time just banging against this lower support line. So ultimately, when it breaks this low support line, ah, it's really ah, strong signal that that they're just not not done much buying interest and a selloff would would continue equally. I like a sending triangles were again You're trying to, you know, multiple chances at breaking to resistance, and ultimately when you when you have multiple chances at breaking through horizontal resistance and eventually break out, that's normally a strong signal. Ah, and in the case of triangles, when it's also establishing higher lows, it's normally ah, good, strong, uh, buy signal. But basically all these things triangles, flags, pennants, rectangles there really common. And they're all kind of in the same family right there, basically consolidations that established the next movement. So if you can identify these common stock chart patterns, triangles, flags, resistance and see how they resolve himself, normally you can kind of give, you know, normally, I'll give you some good confidence in trading pattern. 4. Head and Shoulders, Cups & Handle and Double Bottoms: There's a lot of more elaborate chart patterns that are very common. Ah, and oftentimes you really useful in trading as well. Ah, the one thing I will note with some of these patterns is ah, lot of times they're pretty easily recognizable or that everyone's kind of watching the same thing. And so you know when when everyone's watching the same thing, Sometimes these patterns don't play out exactly as you would expect or their fake outs. Ah, but they're useful. No, anyway. Ah, and there certainly useful toe to kind of know I wanted most common ones is the head and shoulders. There's something you'll see. A lot of people talking about Ah included some examples right here on you can kind of see what it looks like, right? You have basically ah ah, high, then a higher high and then ah, lower high, all with kind of the same support eso that's like, you know what they called dot shoulder head shorter and then the neckline. And when the head and shoulders pattern plays out as it's supposed to, it's basically ah, reversal pattern. It's a bearish pattern, and again we always want to think about the story behind what we're seeing, right? So in the case of a head and shoulders, the market is trying to make highs but keeps getting pulled back to a support line. And then, ultimately, it makes a lower high. You know, it's not able to even muster the energy toe, make a higher high, pulls back to the support line again, and this time breaks that neckline. Eso. You know, the idea is that support eventually breaks. Bulls ran out of steam. Ah, and bears had enough power toe break support. Inverse head and shoulders are kind of the reverse, right? So it's a it's a bullish pattern. In other words, you're you have the shoulders, the head and the shoulders again and the neckline. But it's the opposite, right? So you're making, ah, lower lows, lower lows, but that always being pulled back to consistent resistance level on. Then you're able to make a higher low. Ah, and then ultimately break through that resistance. So the story again is the opposite, right? So you're the market is testing the resistance. Multiple times making is successful, higher, low on when the resistance eventually breaks. It's just like a signal that the Bears kind of ran out of steam, couldn't push the stock of lower, and the bulls had enough power to break through the resistance. Another really common pattern is the cup and handle. Ah, you can again see how it looks right here. Ah ah, it's It's basically ah, stock that's making kind of like a rounded bottom trades all the way back upto a resistance level Channels down, pull to put together ah, bull flag. Ah, and it's a bull flag because ultimately it breaks out higher. And you can imagine why this story the story behind this pattern is bullish, right? So you have this very consistent kind of steady ah rounded bottom that the bulls are able to carve out. You consolidate at resistance. But eventually you do break higher above this resistance, confirming both a bull flag and a break over resistance. Ah, and sells. It's obviously a pretty bullish sign. One pattern that is actually probably more common. Both then both head and shoulders and cupping handles are double tops and double bottoms. Ah, and the idea for both is that you're basically testing a resistance or support line also being pulled back to kind of Ah, you know, some sort of ah resistance line indicates of a double bottom or ah, support line In the case of a double top, um, and then breaking through it s O as you can imagine. Ah, double bottom is a nice bullish reversal, sign or patterned and a double top is, ah, a bearish reversal pattern. And the idea is pretty simple. A stock is revisiting in the case of a double top ah, previous high and is just unable to break through and not only fails, but instead break the opposite way through a previous support or resistance. Ah, and likewise Ah, double bottom. It's kind of doing the opposite. Ah, bear bulls are able to kind of muster the power to, ah to pull a stock up from a previous low and break through resistance. But ultimately, all of these stock patterns in my mind are about buyers and sellers exhausting themselves. Ah, and using up their energy. Ah, you know, Ah, whether it's flags or pennants or some of these bigger patterns like head and shoulders or company handles, they all kind of involved re testings of support or resistance is or trying to establish a trend. But then, ultimately, these patterns break one way or the other for bulls or bears or buyers or sellers. Ah, and it's the way they break. That really kind of tells you the story and gives you insight. Ah, and adds to kind of, ah, the conviction of what the stock price or what the stock chart is trying to tell you. 5. Why Chart Pattern Interpretation is Tricky: here we have Sienna ticker. C i e n on this is an interesting charges because I want to point out one thing and again going back to my point about how chart patterns are sometimes up to interpretation. Right? Um, because, you know, on the one hand, if you just focus on trend lines, it's obviously in an uptrend. You can draw a trendline. Um, and you can see the big uptrend, solid uptrend, nothing If you're long, you probably wouldn't really want to trade around that, depending on how aggressive you want to trade. But, you know, patterns can be opened to interpretation. And you kind of sometimes you need confirmation, right, Because you don't know how exactly is gonna play out. So and we're sitting here today, we can look at it. Some people will look at it and say, Well, you know, I can see a head and shoulders, right. So you have this this Ah, this high here, higher high. But then a big reversal and then shopping around into kind of another high at the same level off this, this other left shoulder, right, So some people will look at and say, Wow, that's a potential head and shoulders. And so what you'll want to watch for, to see how it plays out is what it does at the neckline. Right? Um, and in this case, it's It's an interesting trade because that if you were drawn the neckline drawer right here, right, this looks like where the support waas um, it it lines up with kind of like in the ballpark of this 100 day moving average. If I were to draw a trendline, that's draw. Trendline year doesn't quite line up with this longer term trend line, but, you know, a lot of times you want to draw trend lines from kind of recent highs as well. So you can see this trend line. I just drew, um, you know, if it were to break this level, it would break this trend line. It would break the wanted a moving average and break the neckline so head and shoulders really would play out right? So that's kind of the bearish scenario that a lot of people might be watching if you're barrish Deanna. But on the flip side again, it's open toe interpretation, and it's kind of dependent on confirmation now, you can kind of see the makings of potentially a couple handle right where here's the cup. Maybe its flagging down to this level again. That's a little more kind of Ah, you know, it's harder to see, but it it's it's there. Ah, And so in that case, you would almost look for confirmation on the upside. Right? So, you know, And that's kind of like it would also line up with a lot of things where if we were to confirm on the upside, you would imply that it breaks this previous high, right? Um, kind of would be carving out a cup and handle Ah, as well as breaking out above this resistance. So again, that would be confirmation of a nice long, Um, so you know, you could kind of look at these charts and and see potential, and that's what you want to do. You want to look at charts and see what could happen and then wait for the confirmation in terms of trade, You know, sometimes you want you may want to anticipate it if you're a little more risk tolerant. Um, you know, if you are ah, anticipating a chart pattern, know where it's going to fail, right? So if you are playing, this is a head and shoulders know that if it breaks above the resistance, the head and shoulders is pretty much dead. Ah, and vice versa. If you're playing this as a potential company handle and breakout on the upside, your bullish it know that if it breaks, you know this neckline or any of these trend lines, that bullish scenario kind of is put at risk. 6. Applying the Stacking System 2 Cs: so So far, we've talked about the kind of the first to seize in my stacking system the catalysts and the chart. l'Ours identifying trendline, break support and resistance break as a catalyst and then identified certain chart patterns as as ways to kind of like add to that story. So the first question is using just these two things. Can we actually trade simply with just these concepts without fully understanding the full system? Ah, and to start, I would actually say yes. Um, you know, trading just simple trendline support, resistance and char patterns can be pretty effective. On we're gonna do is we're gonna go through some examples right now. In later lessons, I'll be showing you how I use technical indicators toe add insight into these trades and make them more effective. That's kind of the third seed. A confirmation. Ah, but for now, let's quickly see how we can apply what we already know. Ah, with these two basic concepts to some simple trades and see how effective they can be just on their own again, we're going to start with the idea of stacking patterns, right? Ideally, when you trade, you want to look for multiple patterns and multiple trends, all agreeing with each other, right? So even when you're looking a trend line breaks, you want to look for multiple levels of support and resistance that it's breaking. Ah, and on top of that you want the ideas you want to add those trendline breaks. Add those catalysts on top of chart patterns that may confirm it, right? So inverse head and shoulders, plus a couple handle possible flag, all kind of combined together give you multiple signals, all agreeing with each other, all telling you the same thing. And the idea of stacking patterns is the is the idea that you want to confirm what you're seeing, right? And so the more things that confirm each other and the more things that agree with each other, the more confident you can have in your signal. Right? Um, you know, under the you know, underlying everything is the idea that different traders and different trading robots and computers are all kind of looking at different individual patterns all on their own. And the more the patterns to line up, the more these catalysts and chart patterns lineup, the more traders they're going to training off of them and them or more likely, you'll be on the right side of these trades with everyone else. 7. Tips on Chart Pattern Recognition: so going to try to do so Just chart pattern recognitions just to kind of give you a sense for, you know, you know, talking through how ah, chart patterns kind of look in an actual reality because they're not always clean right there. Open to interpretation. But you know, one of the things that you'll generally see and you can generally trade around our big support levels. Either trendline supports horizontal supports, and resistance is and the moving averages here of a ticker Netease and T. E s, the Chinese Internet company on you can kind of see this is a weekly chart again. I, as I've said, I like weekly charts just cause it's a little It's a better time frame for for a lot of trading because eliminates some of the noise. But you can see how cleanly Ah, this uptrend Ah, it had kind of in the 2015 toe, 2018 timeframe where on a weekly basis, you know, it was trading around and would rally, but up friend was solid. Um and really, you can see how this 50 this light like year is the 50 week moving average in and see how it tended to kind of try to hold that level. Ah, and when you know the moving averages will line up with other support levels, They became good support levels and probably goodbyes at the time. And in hindsight, they were goodbyes again. Here, in this frame there was a sharp pullback. But, you know, it kind of lined up with 50 week moving average here, this previous low this previous high. Which of your draw a horizontal line, would be kind of like an important support level. So if it held, it would be bullish, and that's basically what it did. Ah, and then when it broke this uptrend line, it was it was tradable because it had held support. Ah, and traded up the other thing. You'll see a lot in this. Ah, And in this chart is all the flags. Flags tend to be pretty common chart patterns you can see here. I mean, you could argue this is a bull rally pull back. So you know that's flagging. You know, when it you know, as it breaks out of this channel here. Ah, and kind of breaks that down trend. It's It's a tradable long another flag here. Here. You have a bear flag. See? So you know, there was It was a sharp pull back, a little bit of kind of a rally, but in a channel, if you were to kind of draw this this flag here and then once it broke you. If you draw a line right here once it broke, then it's probably a cell, right? Ah, this is actually a better example of flag where it's just in this long downtrend. Sustained downtrend, very defined downtrend. It rallies here, but again, it's this important support level, right? I'm gonna draw a horizontal line. Um, kind of like right at this level and again, I'm just picking a level that's around the this, this support or around this previous important line where it was resistance here, support, support, support. And, you know, after it broke down this line, it flagged up. So we have a bear flag here which, you know, again consolidated around this line. And what's it failed once it broke this line, it it really failed. Ah, And so, you know, this is a good example of how chart patterns you can kind of see them play out 8. Trading Walkthrough: Buying WEED: Here's another kind of bullish set up right here. Um, I pull up a weekly chart for weed. It's Ah, it's Ah, it's a cannabis growth stock. Um, and so you can kind of Look, just look at the start right here. You can see the uptrend lines that have been broken. This is obviously a more volatile stock, But you can notice the times where the stock has held weekly support, whether it's, ah, this case to 50 week moving average or previous highs and lows. Um, and just use supports and trend lines to guide your entry and exit points, even if it's kind of a longer term investment. Ah, One of things you'll notice right away is ah is you know this, you know, as it was going down and trending down. It did break this down trend line, so that would be a nice little signal. Um, and maybe you wanna wait. Maybe you don't necessarily want to trade right on that, but you want to see how it plays out. Patients is always good when training these stocks. And in this case, once it got back up to it's high. You can see this just multi week flagging formation, right? And so once it break, bad breaks back above, it will confirm that it's a bull flag on confirms a lot of other signals as well, right? You can kind of see, you know, a very crude cup and handle where you know, it kind of like made a bottom turn back up and then flag back down. You can see where it's just at this weekly resistance line. And so, you know, once trading strategy would be to buy this break out of this resistance line because obviously it's really strong resistance that established itself. So if we was able to break through, it's a really strong signal. It's being confirmed by this. Ah, in percentage shoulders by this bull flag. So you have a lot of things agreeing with each other that this resistance line Ah, you know, break of this resistance line would be a very bullish level. It's also an easy trade because, you know, you always ask yourself, Well, what's you know what would happen to make me change that story and in this case, breaking back down. But below this, uh, you know, below this resistance line, which you know should be support. Now, if it breaks below and it starts invalidating all these patterns, then you can get out of the trade and move onto the next one or keep watching it until you know a better set up appears. 9. Trading Walkthrough: Wild Western Digital: so I'm looking here at Western Digital. Ah, ticker. W d c. I like this chart because it has a little bit of everything. Ah, you can see right off the bat it has. It was down and up and down on you can see how basically kind of basic simple price action technical. Ah, chart patterns work here. Um, you were going to start back here, And I guess this 15 4016 timeframe where really the stock was just going in. It was a no multi month downtrend. Ah. So if you want to draw a trend line here, you could see, um, it was in a downtrend for, you know, pretty much distance since this peak here, the first sign of life really came in this October. I guess it's in May 2016 where this steep downtrend that you could have drawn was broken. So that's kind of where you want to. Um, you know, have your eyes open and say, Well, it was in this downtrend, and it's broken and let's see how it plays out. It probably wouldn't have been a long yet because, you know, if you had drawn multiple lines here. Thes thes down trends would have been broken similarly, but then just reverse right away. So you what you want to do when you do have some sort of trendline break simple trendline break like this is to kind of give it some time and see how it plays out. You don't want to rush these trades. Um, and what you want to do it? See? Hopefully see multiple signs that ah, that are confirming each other, which is actually what ends up happening because, you know, had it. You know it it broke this down trend. So that's the first sign of life. Um, you know, you can draw these horizontal support. He'll dry right here. Ah, you could you could kind of see Okay, Well, so it broke this line and it reversed and kind of retested this line, but it held Ah, and it kind of chopped around for a while, trying to make its way Until it got to this this this dominant downtrend line, which is like, you know, the longer the time frame of the ah of a trendline them or kind of like, harder it is as resistance. So you can kind of see as it as it as it made its way up here. It was halted right away at this kind of big downtrend line. But then once it broke again, that that's that's important because again, it's a strong downtrend line. It's a multi month downtrend line there was able to power through. Ah, on it's basically second try. So then you had the steep downtrend already broken. You had it holding this support horizontal line and you had it breaking this, um, this downtrend line here. So right up right there, you're thinking to yourself. Okay, well, this is an interesting trade because it's it seems price action is telling you that Ah, that it's strong and might be turning breaking down trend lines Breaking horizontal resistance is ah, and then, you know, again trading up and then going back to retest that horizontal resistance and holding So again, this this this line, which had been important at this point, have been important for it. Toe kind of breakthrough got retested and now actors support strong. Also notice a very clear, almost like textbook inverse head and shoulders pattern. And again, those air reversal patterns right um eso you can see right here where the cursor is the left shoulder, the head, the right shoulder. Um, each one holding kind of the support lines that neckline lining up with these this downtrend line, which it hailed. So you've got trendline downtrend lines, breaking horizontal support holding, and then you have an inverse head and shoulders pattern. Ah, kind of like overlaying everything. So you have multiple signs that say, Well, this is that's that's about as bullish as you can get on this time frame. Uh, so you can you make that trade your If you're bullish, you could go along it because all these technicals, all these chart patterns are actually confirming your bullishness. And then you can see it worked. I mean, essentially from here. Once everything was confirmed, went from 54 it was almost a double. Ah, and kind of ah, pretty short amount of time free 10. Rapid Fire Trading Walkthroughs: so I'm gonna try to just do rapid fire on Just just flip through my watch list and just identify some chart patterns. Just what I see just what jumps out at me. Right. So here, Facebook, um, you can see what I would look at is ah, you know, downtrend line here. Right? That's kind of a longer term ground trend. Ah, you know, this is kind of a more immediate downtrend. Ah, that it broke. Sorry. Um, that broke up, so that would be positive. And then you start getting into Ah, bullish scenario. You can draw these support, lawyer. Ah, this is a support line here that it broke above retested, retested to support. So if you look at it Ah, here, you'd say. OK, well, this is an important line because it's been retested Support acted as a poor, acted as resistance. Ah, and then acted as support a couple of times after this break out this gap up, break out and then, you know, it lines up with this kind of trending up 100 day moving average. The moving average has been trending down. Now they're trending up. So this is a bullish chart I would look at it as a bullish chart. Um, and and that's, you know, kind of like a positive here to apple apple again. Very steep downtrend that it broke. Um ah. And then you start similar. Facebook's just started carving out Ah, lot of, ah, you know, brakes of resistance is, you know, here is ah, you know, this previous low and then acted as resistance. So when it broke above this level and then held retested this level as and they improved it as support and re tested a couple times that you're bullish chart now, you may not necessarily buy it right there. You might want it to confirm on the upside a little bit. And so you You know, if you were standing right here and it held support, you would say, OK, well, what's the next resistance line? Certainly here would be the very near term high which lines up with this consolidation area . Maybe you'd be less aggressive and say, Well, I really wanted to break this line because this seems like a more important line, right? It was support here. It was this big gap down really kind of acted of resistance at this high. So maybe that's my bullish. That's really my bullish scenario. And they get you kind of look at it is and say All right, well, this almost looks like a cup and handle right around it. Bottom, You know, not a completely rounded bottom, but, you know ah, bottom with the consolidation, You know, in this case, you know, you can call it a rectangle. You can call it a just kind of a channel. But then it breaks above breaks above. And, you know, if you're using this line breaks above retest. And so then you know it's it's you kind of look in and say, Wow, it's it's passed a lot of tests made a lot of kind of like bullish. You know, there's a lot of bullish action, right? Breaking a resistance is holding support, breaking resistance, holding support, And then finally, kind of breaking above all the moving averages. All the moving averages turning up, um, and then really establishing Ah, an uptrend. Right. You can kind of like, look at it here. Um, and look at this charters as a bullish chart. Um, let's see what else we have. Ah, let's to This is canopy growth. It's Ah ah, marijuana company. Cannabis is a kind of like growing industry right now. Ah, I would look at this chart again at the daily chart. Um, and look at and say Okay, well, this is a nice, long potential bull flag, right? It had this big rally off this low. Um, and then you have this. Ah, this potential channel. Um, I'll just draw a kind of a trend line here. Right? Trendline here. Sometimes you don't need to be so exact. Right. But, you know, this is how I'd kind of look at it. And so, you know, if you can break above which it did Ah, that would be bullish. Right? So rally flagging, you know, in a channel. Ah, and then kind of a break. And then again, you're you. You'd want to look at this resistance to write, um, where you know, you have this area of consolidation previous high, and if you can break above, you know, we're kind of like on the verge of a bullish of a bullish pattern. Now it hasn't confirmed yet, so, you know, depending on how you want it to be, how I guess if you want to be, you might say, Well, you put on your wash lists and say potential potentially bullish. Right? Um and then, ah, then kind of, like, kind of watch how it trades from there. 11. Bonus: The Next Step in the Stacking System: So now you know how to identify common stock chart patterns and how to use them to identify bullish or bearish setups. Remember, it's the second part of my stacking system of the three C's process. We've already covered the catalyst in a previous lesson, looking for breakdowns and breakouts of trendline support and resistance toe. I'd have identify a trigger for our trades. And now we've added the chart pattern to tell us whether the shock stock chart is giving us a bullish or bearish trading signal. Next up is a key tool that will give you a real edge in your trading. The confirmation in other words, confirmation of your trading signals using technical indicators. What are technical indicators? Well, it's the next level of reading a stock chart. It's all these crazy lines that you'll see on the common stock chart APS, and we're gonna learn how to read them and what they're trying to tell us and how they really confirm what we've already learned. So be on the lookout for the next class in this Siri's to confirmation specifically how to use and identify technical indicators. In the meantime, take a second to leave a review. I welcome any feedback. Also, feel free to go to market mind trading dot com and join my free email nous for free charts , insights creating tips and discounts on my future products. Also follow me on Twitter for daily tips, charts and real time trades and market insights on Twitter I'm at market mind three dot com . Talk to you soon.