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* gives us data points to compare and contrast
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* gives us data points to compare and contrast
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* uses chart patterns, price data, trading volume and indicators
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* uses chart patterns, price data, trading volume and indicators
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* allows us to follow a systematic strategy that can be improved
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* allows us to follow a systematic strategy that can be improved
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* cannot predict the future
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<br>
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---
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### candlestick charts
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<br>
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* data rich trading analysis
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* time and price details
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* traders use candlestick chat patterns to antecipate the future
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* show market high and low for a given time period
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* each candle is a period in time
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* tells: open/close (body) high/low (wick) for a period of time
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172071731-4cfd9c34-e7c9-4bff-84b1-ec3144ed7516.png" width="20%" align="center" style="padding:1px;border:1px solid black;" >
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<img src="https://user-images.githubusercontent.com/1130416/172071770-3cfa971d-28bd-4532-bd48-324a256091b8.png" width="20%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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##### hammer pattern
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* bullish pattern
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* sellers drove price lower during the day
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* buyers came in and the price finished higher
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* will continue tomorrow?
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* where are open, close, high, low?
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172071878-e34d61ca-61ba-4ba0-b2b5-7f75cd8efa4a.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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##### shooting star pattern
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* bearish pattern
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* buyers drove price high
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* sellers won and price fell lower
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* will this continue tomorrow?
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172071957-7c5ff9f4-957a-4cb8-89b1-c091cf4c4cc0.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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##### bullish engulfing pattern
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* bullish pattern
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* bullish candlestick "engulfed" the bearish candlestick
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* represents a strong reversal in the price action
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* will continue tomorrow?
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172072021-91b32a2a-08e8-4c68-9756-111ae05764b1.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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##### bearish engulfing pattern
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* bearish pattern
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* bearish candlestick engulfed the bullish candlestick
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* represents a string reversal in the price action
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* will continue tomorrow?
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172072097-e9058226-65b4-43ff-a017-f2a235691fc6.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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----
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### chart patterns
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<br>
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* used in conjuction with candlestick charts
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* longer-term analysis of market movements
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* bullish and bearish patterns
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* used with day trading and swing trading
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* dont tell about longer term trends
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##### double top
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* bearish pattern
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* buyers tried wtice to push price higher
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* buyers unable to push price higher
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* price has no moment at this level
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* buyers run ot of steam
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* sellers are in the market
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172072239-54e95e3f-df11-4ec9-92a2-737ec05c1fd9.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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##### double bottom
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* bullish pattern
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* sellers came in twice
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* price found support of buyers twice
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* buyers happy to pay up
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* sellers may run out and buyers need to pay more
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* buyers are in the market
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172072325-c19f5111-abf3-4c38-8e18-9a1e3526ea11.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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##### asceding triangle
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* charts never trade in a straight line
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* charts trend
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* highs and lows are important
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* consolidation is imporant
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* higher highs or higher lows is bullish
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* narrowing of a range can preceed a breakout
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172072378-59cffb28-7589-44fc-8e54-b040ec239496.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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---
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#### 👉🏼 [reading candlestick charts](candlesitck_charts.md)
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### trends
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<br>
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* we can't trade from patterns all the time, they are quite rare
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* trends patterns will guide us more often
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* patterns can be housed within trends
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* if we can find the trend, we can ride the trend for profit
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##### asceding wedge - higher lows
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172072540-324afc3d-0b31-4ffd-ab4f-96a829d244bf.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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##### desceding wedge - lower highs
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172072564-59a193ef-f374-4924-8c0c-ddda21487675.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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##### consolidation
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* give us a strong area of trade where traders have been before
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* area in the chart moving sideways
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* we can use consolidation as a guide for our entry/exit points
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* sometimes preceed breakup
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* where buyers/sellers are at equilibrium and can't last forever
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* use these levels for our stop loss levels
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<br>
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<p align="center">
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<img src="https://user-images.githubusercontent.com/1130416/172072655-e0b13963-4b68-4641-9c6b-888a4fc9a5f1.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
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</p>
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<br>
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##### support and resistance
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* support and resistance are simply significant price levels
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* resistance can become support if a price breaks through that level in an uptrend
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* vice versa for a downtrend
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##### moving averages
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* SMA: arithmetic mean of prices over a given time period
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* EMA: weighted and give more importance to recent prices
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##### relative strength index (RSI)
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* plots the relative strength of the price compared to previous prices
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* momentum indicator
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* above 70: price is relatively expensive (overbought)
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* below 30: price is relatively cheap (oversold)
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* can't predict how the price will change in the future
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##### average true range
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* measure of daily price volatility
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* tell us the true amount the price could move in a given day
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* largest probably move for one day based on previous data
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* can be used to set our stop loss and give the trade some breathing room
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---
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### how to trade with trends
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1. Identify the market trends
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2. Ask where are the main areas of trade
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- where is support and resistance?
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- any chart pattern?
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3. Make your entry based on the daily trade action
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- is the candlestick telling us that the trade will go in the direction of our trade?
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- is the trade bullish or bearish based of candlestick patterns?
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<br>
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---
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