7 Chart Patterns That Consistently Make Money EE DD BBYY DD OOWWNNSS CEO & Founder, Nirvana Systems Inc. Titles in the Trade Secrets Series 7 Chart Patterns That Consistently Make Money by Ed Downs Charting Made Easyby John Murphy The Four Biggest Mistakes in Futures Trading by Jay Kaeppel The Four Biggest Mistakes in Options Trading by Jay Kaeppel Bar Chart Basics by Darrell Jobman Trading System Secrets: Selecting a Winning System by Joe Krutsinger Profit Strategies: Unlocking Trading Performance with Money Management by David Stendahl Simple Asset Allocation Strategies by Roger Gibson advertisement traderslibrary.com Special Offer Exclusive Price Through this eBook Only Retail Price: $39.95 Your Price: $9.95 What is support and resistance? It's one of the most basic - and most important - ele- ments of technical trading. Why? Because it eliminates most of the “guesswork” and allows you to make logical, well-supported trading decisions, rather than impulsive, emotion-driven choices. This easy-reading primer is the first work in decades devoted solely to “S&R”. From basic to complex strategies, every nuance and vital new application is explained in easy-to-follow terms. > CliCk Here to read More “Chart patterns form because people react to price movements in consistent ways based mostly on fear, greed, and herd mentality.” — Ed Downs Copyright © 2000 by Ed Downs. Published by Marketplace Books All rights reserved. Reproduction or translation of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copy- right Act without the permission of the copyright owner is unlaw- ful. Requests for permission or further information should be addressed to the Permissions Department at Traders’Library. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered.It is sold with the understanding that neither the author nor the publisher is engaged in rendering legal,accounting,or other professional ser- vice.If legal advice or other expert assistance is required,the ser- vices of a competent professional person should be sought. From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers. This book,along with other books,are available at discounts that make it realistic to provide them as gifts to your customers,clients and staff. For more informa- tion on these long-lasting,cost-effective premiums, please call John Boyer at 800-424-4550 or email him at [email protected]. ISBN 1-883272-61-0 Printed in the United States of America. Contents Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Introduction Different Charts and How to Read Them . . . . . . . . . . 13 Chapter 1 THE POWER OF TECHNICAL ANALYSIS. . . . . . . . . . . . 15 Trading vs.Investing: Choose One and Profit From It. . 15 The Power of the Short Side. . . . . . . . . . . . . . . . . . . 20 $10,000 to $1 Million in One Year. . . . . . . . . . . . . . . 23 Do Technical Analysis and Charting Work?. . . . . . . . . 26 The Formula for Success in Trading. . . . . . . . . . . . . . 27 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Chapter 2 THE SEVEN CHART PATTERNS FOR SUCCESSFUL TRADING. . . . . . . . . . . . . . . . . . . . . . . . 29 Computers Can’t See Everything…. . . . . . . . . . . . . . . 29 Chart Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Chapter 3 CHART PATTERN 1: Support and Resistance. . . . . . . . . 31 Chapter 4 CHART PATTERN 2: Trendline Break and Reversal . . . . 35 Chapter 5 CHART PATTERN 3: Saucer Formations . . . . . . . . . . . . 39 Chapter 6 CHART PATTERN 4: Fibonacci Retracements. . . . . . . . . 43 Chapter 7 CHART PATTERN 5: Gaps (Breakaway, Measured, Exhaustion) . . . . . . . . . . . . . . . 45 Chapter 8 CHART PATTERN 6: Volume Climax,Volume Trend. . . . 47 Chapter 9 CHART PATTERN 7: Consolidations (Flags and Triangles). . . . . . . . . . . . . . . . . . . . . . . . . . 51 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Chapter 10 PREDICTING MARKET DIRECTION. . . . . . . . . . . . . . . 55 About SignalWatch.com . . . . . . . . . . . . . . . . . . . . . . 55 Why the Dow?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Consolidations Are Magic!. . . . . . . . . . . . . . . . . . . . . 57 What Will the Dow Do Tomorrow? . . . . . . . . . . . . . . 59 Chapter 11 TRADING THE MOVES WHILE MINIMIZING RISK . . . . 61 The Golden Exit Rule. . . . . . . . . . . . . . . . . . . . . . . . 61 Setting Stops to Minimize Risk . . . . . . . . . . . . . . . . . 62 Maximizing Profits on Every Trade . . . . . . . . . . . . . . 65 Put the Odds in Your Favor! . . . . . . . . . . . . . . . . . . . 68 Closing Thoughts. . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Trading Resource Guide . . . . . . . . . . . . . . . . . . . . . . . . . 71