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Technical analysts and traders believe that certain
stock chart patterns and shapes are signals for profitable trading opportunities. Many
professional and amateur traders claim that they consistently make trading profits by
following those signals. In this chapter we introduce eight types of stock patterns and
the corresponding trading strategies, that, according to our extensive historical tests, give the trader an advantage.
Triangle Breakout
Figure 18. Triangle Breakup
This is the famous Triangle Breakup pattern, a strong buy signal. In the past two months
the stock price shown has consolidated with declining amplitude and
volume. At present, it breaks out with high volume, signaling a possible new up
trend.
Figure 19. A typical Triangle Breakdown pattern—a strong sell
signal.
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