Chart Patterns and Technical Analysis of Commodities Please support our sponsors. Click an ad today. For the technician the recurrence of identifiable patterns and formations that have preceded important movements of the market in the past provide important clues as to the probable direction of price movement in the future. Chart patterns are formations that appear on the charts which provide you with forecasting tools of impending price movement.
Some patterns are more reliable than others for price forecasting. .
None of the chart patterns are infallible . They have a high probability of success but are not guaranteed to work all of the time. Technicians must always be on the alert for chart signs that prove their analysis to be incorrect. After trend lines, support and resistance lines have been drawn on a chart, one of the most important and most difficult decisions you will have to make is determining the timing of entering and exiting the market as well as determining when a major top in a rising market or a major bottom in a declining market has occurred. There are two types of patterns that develop on charts, the reversal pattern and the continuation pattern .