CMT Level 1

Part IV: Chart Pattern Analysis

Chapter 15: Bar Chart Patterns

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• Chapter Objectives
• What Is a Pattern?
  • Common Pattern Characteristics
    • Entry and Exit
    • Fractal
    • Pullbacks and Throwbacks
    • Failures
• Do Patterns Exist?
• Behavioral Finance and Pattern Recognition
• Computers and Pattern Recognition
• Market Structure and Pattern Recognition
  • Further Reading
    • Bar Chart Patterns
      • Encyclopedia of Chart Patterns by Thomas N. Bulkowski
      • How Charts Can Help You in the Stock Market by WIlliam Jiler
      • How Technical Analysis Works by Bruce Kamich
      • Profits in the Stock Market by H. M. Gartley
      • Technical Analysis by Jack Schwager
      • Technical Analysis Explained by Martin Pring
      • Technical Analysis of Stock Trends by Robert Edwards and John Magee
      • Technical Analysis of the Financial Markets by John Murphy
    • Point-and-Figure Patterns
      • Point and Figure Charting by Thomas J. Dorsey
      • Study Helps in Point & Figure Technique by Alexander Wheelan
      • The Chartcraft Method of Point and Figure Trading by Abe Cohen, Earl Blumenthal, and Michael Burke
      • The Definitive Guide to Point and Figure by Jeremy du Plessis
    • Trading–Short-Term Patterns
      • Connors on Advanced Trading Strategies by Laurence Connors
      • Dave Landry’s 10 Best Swing Trading Patterns and Strategies by David Landry
      • Encyclopedia of Candlestick Charts by Thomas N. Bulkowski
      • Japanese Candlestick Charting Techniques by Steve Nison
      • Long-Term Secrets to Short-Term Trading by Larry Williams
      • Market Wizards by Jack Schwager
      • New Concepts in Technical Trading Systems by J. Welles Wilder, Jr.
      • Street Smarts by Laurence Connors and Linda Bradford Rashke
      • Trading Systems and Methods by Perry J. Kaufman
• Bar Charts and Patterns
  • Intro
  • How Profitable Are Patterns?
    • Using Breakout Price to Set Price Targets
  • Classic Bar Chart Patterns
    • Double Top and Double Bottom
      • Trading Double Formations
    • Rectangle (Also “Trading Range” or “Box”)
      • False and Premature Breakouts
      • Trading Rectangles
    • Triple Top and Triple Bottom
    • Standard Triangles
      • Statistics on Triangles
      • Descending Triangle
        • Descending triangle with breakout down
        • Descending triangle with breakout up
      • Ascending Triangle
        • Ascending triangle with breakout down
      • Symmetrical Triangle (Also “Coil” or “Isosceles Triangle”)
        • Symmetrical triangle with breakout up
        • Trading Triangles
    • Broadening Patterns
      • Other names for broadening patterns
        • megaphone
        • funnel
        • reverse triangle
        • inverted triangle
      • Broadening formation with breakout up
    • Diamond Top
      • Diamond pattern with breakout down
    • Wedge and Climax
      • Rising wedge with breakout down from a climax peak
      • Declining wedge with breakout up from climax trough
      • Trading Wedges
    • Patterns with Rounded Edges– Rounding and Head-and-Shoulders
      • Rounding Top, Rounding Bottom (Also “Saucer,” “Bowl,” or “Cup”)
        • Cup or bowl and handle variety of a rounding bottom with breakout up
        • Head-and-Shoulders
          • Head-and-shoulders top with breakout down
          • Head-and-shoulders bottom with breakout up
          • Trading Head-and-Shoulders Patterns
    • Shorter Continuation Trading Patterns– Flags and Pennants (Also “Half-Mast Formation”)
      • Flag and pennant in upward trend
      • Trading Flags and Pennants– Measured Rule
    • Long-Term Bar Chart Patterns with the Best Performance and the Lowest Risk of Failure
      • Comparative Results in Most Favorable Classic Bar Chart Patterns (Table)
• Conclusion
• Review Questions

Proceed to Chapter 22: System Design and Testing (in Kirkpatrick and Dahlquist)

Chapter list for Kirkpatrick and Dahlquist