To successfully analyze any financial market—whether forex, crypto, stocks, or commodities—you must first understand the three core premises of technical analysis.
Buyers attempt to push the trend higher but fail to exceed the peak of the head. This lower high signals that demand is drying up.
: Drawing tools used to connect price peaks or troughs to visualize the direction and strength of a trend.
Human psychology drives market cycles. Fear, greed, and herd behavior create predictable, repeatable geometric patterns on charts. Chart Typology trading technical analysis masterclass pdf
Always aim for a minimum R:R ratio of 1:2. This means for every dollar risked, your profit target seeks to capture two dollars.
Price creates a higher high, followed by a minor retracement.
Place your entry near support in an uptrend, near resistance in a downtrend. Place your stop loss just beyond the level. : Drawing tools used to connect price peaks
Technical Analysis (TA) is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends. Unlike Fundamental Analysis, which focuses on a company's earnings and economic data, TA focuses on price and volume. The underlying philosophy is simple:
Only trade in the direction of the larger trend. If daily chart is up, look for buys on pullbacks.
Candlesticks reveal the immediate emotion of the market. Here are the highest probability patterns. Chart Typology Always aim for a minimum R:R ratio of 1:2
A series of higher highs (HH) and higher lows (HL).
The first rule of technical analysis: News, earnings, rumors, even tweets — it’s all baked into the current market price.
Closes lower than it opened. Sellers controlled the session.
Consists of three peaks where the middle peak is the highest. Breaking below the connecting neckline completes the bearish structure.