Chart pattern

Chart Pattern is a study of the pattern that are naturally formed within the chart. In stock and commodity markets trading, this chart pattern studies play a huge role. While you plot the historical prices of a stock or index you tend to see a pattern naturally occuring and re-occuring over a period. The Chart Pattern enthusiasts believe this pattern will continue in future too and try to take their trading decision based on the pattern they observe.

These chart pattern is not a pure science. However, many charts do have a pattern and the trick is to define the appropriate rule with which the chart moves up or down.

Head and Shoulders, Ascending Triangles, Descending Triangles, Price Channels, etc are some of the chart patterns widely in use in the trading community.

Elliott Wave is also one of the theories developed by studying historical chart patterns.