Chart patterns help traders understand market sentiment at any given point in time. Unlike technical indicators, identifying and analyzing chart patterns is qualitative (subjective) rather than quantitative. It’s not enough to simply recognize a pattern — you must look at the bigger picture to validate it. This means assessing the strength of a chart pattern and using other forms of technical analysis to confirm it.
Let’s take a look at what chart patterns are, some of the most popular patterns, how to trade them in practice and other important considerations.