Struggling to understand price charts? You're not alone. In this video, I'll break down key technical analysis concepts so you can read any chart with confidence and make smarter trading decisions. Here's what we'll cover: Candlestick patterns, Market structure, support and resistance, and chart patterns. Before we dive in, make sure to like this video, subscribe, and hit the notification Bell so you don't miss future trading content. Now let's get started.
Before you can make smart trading decisions, you need to understand how the market communicates, and the first thing you need to learn is Candlestick patterns. The foundation of price action, every candle tells a story about buyers and sellers, momentum, and potential reversals. If you can read these patterns, you'll know what's happening in the market before making a move.
Now let's break down the most important Candlestick patterns you need to know. One of the most powerful Candlestick patterns every Trader should know is the hammer. It's a bullish reversal pattern that signals the potential end of a downtrend and the start of an upward move. So how do you recognize it? A hammer Candlestick has a small body at the top, a long lower Wick, little to no upper Wick. This tells us that sellers pushed the price down but buyers stepped in and forced it back up, closing near the high – that's a strong sign of buying pressure.
Just like the hammer signals a potential reversal to the upside, the shooting star does the opposite. It warns that a downward move could be coming; it's a bearish reversal pattern that appears after an uptrend and signals that buyers may be losing control. So how to recognize a shooting star? A small body near the bottom, a long upper Wick – at least twice the size of the body, little to no lower Wick. This tells us that buyers tried to push the price higher, but sellers took over and forced it back down, closing near the low – that's a strong sign of selling pressure.
Unlike the hammer or shooting star which signal clear reversals, the doji represents indecision in the market. A doji is a Candlestick pattern that signals indecision in the market; it forms when buyers and sellers push the price in both directions, but by the time the candle closes, neither side has won. The result is a candle with an open and closed price that are nearly the same, creating a very small or non-existent body. The key characteristic of a doji is its long upper and lower Wicks, showing that price moved up and down before settling back near its opening level. This pattern often appears after strong Trends or in consolidation phases, signaling that the market is at a decision point.
The engulfing bar is one of the strongest Candlestick patterns that signals a shift in Market control. It's a two candle pattern where the second candle completely engulfs the previous one, showing that either buyers or sellers have taken over. A bullish engulfing appears after a downtrend; the first candle is red, showing that sellers were in control, but then a much larger green candle follows, completely covering the previous one. This tells us that buyers have stepped in with strong momentum, overpowering the sellers, and a potential reversal to the upside could be underway. On the other hand, a bearish engulfing happens at the top of an uptrend; the first candle is green, indicating buying pressure, but then a much larger red candle follows, completely swallowing the previous one. This shift shows that sellers have taken control, and a potential move downward could be coming.
An inside bar is a Candlestick pattern that signals Market consolidation and a potential breakout. It forms when the current candle is completely contained within the range of the previous candle, meaning its high is lower and its low is higher than the previous bar. This shows that the market is in a temporary pause, with neither buyers nor sellers pushing price beyond the previous range. Inside bars often appear after strong moves, acting as a moment of indecision or a buildup before the next big move. When price eventually breaks out of the inside bars range, it can signal the continuation of the previous Trend or a possible reversal.
The evening star is a powerful bearish reversal pattern that signals a potential shift from an uptrend to a downtrend. It consists of three candles and forms at the top of an uptrend, warning that buyers are losing strength and sellers are taking control. The first candle is a strong bullish candle, showing that buyers are still in control; the second candle is a small bodied candle, which can be a doji or a small bullish or bearish candle, indicating that momentum is slowing down and indecision is creeping in; the third candle is a strong bearish candle that closes deep into the body of the first candle, confirming that sellers have taken over. The Morning Star is a bullish reversal pattern that signals a potential shift from a downtrend to an uptrend. It consists of three candles and typically forms at the bottom of a downtrend, indicating that sellers are losing strength and buyers are stepping in.
The first candle is a strong bearish candle, showing that sellers are in control; the second candle is a small bodied candle, which can be a doji or a small bullish or bearish candle, indicating indecision in the market; the third candle is a strong bullish candle that closes deep into the first candle's body, confirming that buyers have taken over. Now let's move to the second part, which is Market structure. The market doesn't move randomly; it follows a structure. Recognizing this structure helps Traders understand what's happening and what could happen next.
There are three main types of market conditions: uptrend, downtrend, and range. Let's break them down, starting with the uptrend. An uptrend occurs when the market is making higher highs and higher lows over time. This means buyers are in control, consistently pushing prices up. The movement in an uptrend isn't a straight line; price Moves In Waves, creating a stairstep pattern. Each time price moves up, it eventually pulls back slightly before continuing higher. These pullbacks are natural and show that the trend is still healthy, as long as higher lows continue to form. An uptrend stays valid as long as price continues making higher highs and higher lows. If price fails to make a new high and starts creating lower lows, it could be a sign that the trend is weakening.
A downtrend is the opposite; it happens when the market forms lower highs and lower lows over time. This means sellers are in control, continuously driving prices down. Just like in an uptrend, price Moves In Waves instead of making higher highs; the market pushes downward, makes a small retracement upward, and then drops again, creating a lower low. A downtrend remains intact as long as price continues making lower highs and lower lows. If price fails to make a new lower low and starts forming higher highs, the trend could be shifting. A range Market, also called consolidation, happens when price moves sideways between a clear support and resistance Zone. Unlike Trends where price moves up or down consistently, a range Market shows that buyers and sellers are evenly matched, causing price to stay within a defined boundary.
In a Range, price repeatedly bounces between support, the lower boundary, and resistance, the upper boundary, without making new highs or new lows. This type of Market typically occurs when the market is waiting for a catalyst before choosing a direction. A range can last for a short or long period and eventually price will break out either upward or downward, leading to the start of a new trend. Support and resistance are key price levels where the market tends to react. They act as invisible barriers that influence price movement, making them one of the most important Concepts in trading.
Support is a price level where the market stops falling and bounces back up. It represents an area where buyers step in, preventing the price from going lower. When price reaches support, it often reacts by reversing or slowing down before making its next move. A support level forms when price touches the same area multiple times and fails to break below it. If price eventually breaks through a support level, that level can turn into resistance. Resistance is the opposite; it's a price level where the market stops rising and reverses downward. It represents an area where sellers step in, preventing price from going higher.
Just like support, resistance is confirmed when price touches the same area multiple times without breaking above it. If price eventually breaks through resistance, that level can turn into support. One of the most important Concepts in trading is the support and resistance flip. When a broken support level becomes resistance, or a broken resistance level becomes support. For example, if price breaks below support, that level can act as resistance when price retests it from the other side. Similarly, if price breaks above resistance, that level can turn into support.
Now that we've covered Candlestick patterns, Market structure, and support and resistance, let's bring everything together and analyze a real chart step by step. The market is clearly trending up, forming a pattern of higher highs and higher lows, which tells us that buyers are in control. As price moves higher, it eventually hits a resistance level where it struggles to break through, but once it finally does, that same resistance level flips into support.
When price comes back down for a retest at this new support level, we see a doji Candlestick forming. This is a strong signal that the market is in an indecision phase, but with strong bullish momentum, the formation of this pattern confirms the end of the retracement move and the beginning of a new upward push, indicating that the uptrend is likely to continue. In this chart, the market is clearly in a downtrend for forming a series of lower highs and lower lows, which signals that sellers are in control. At some point, price finds temporary support and begins to retrace upward, but instead of reversing the trend, the market hits a resistance level which was previously a support Zone.
This is known as a support to resistance flip, a key characteristic of a strong downtrend. At this resistance level, a shooting star Candlestick pattern appears, this is a strong bearish signal showing that buyers tried to push the price higher but failed and sellers are starting to take control. This confirms that the retracement move is ending and the downtrend is likely to continue as sellers step in to push the market lower once again. Now let's look at a range-bound market where price isn't making higher highs or lower lows, but instead moves sideways between a clear support and resistance Zone.
In this chart, price is bouncing between support and resistance meaning that neither buyers nor sellers have full control. Every time price reaches the resistance level, sellers step in and push it back down; every time price reaches the support level, buyers step in and push it back up. At one point, price reaches the support level again, but instead of breaking lower, a hammer Candlestick pattern forms. This is a strong bullish reversal signal indicating that sellers tried to push the market lower but failed and buyers are starting to take control.
Since we are in a Range, the appearance of a hammer at support suggests that the market is likely to bounce back up toward resistance until a breakout happens. The market is expected to stay inside this range. By combining Market structure, support and resistance, and Candlestick patterns we can easily understand what's happening and anticipate the next move. Even in a sideways Market, this shows the power of technical analysis.
With just a few simple Concepts, you can analyze any chart, understand the Market's behavior, and predict potential price movements with confidence. Now let's move to an important part of chart analysis, chart patterns. These patterns help us understand Market behavior and predict possible price movements, but don't worry, we're not going to cover every single pattern out there. You don't need to memorize a 100 different formations. We'll focus only on the most important and effective ones that actually matter.
Okay, the first one is the double top, a simple but powerful reversal pattern. The double top is one of the most effective and easy to spot reversal patterns in trading; it signals that an uptrend may be coming to an end and a potential move to the downside is likely. This pattern forms when price attempts to break a resistance level twice but fails both times. This failure shows that buyers are losing momentum and sellers are stepping in to push prices down. A valid double top consists of three key Parts: First Peak price moves up and hits a resistance level, pull back price drops slightly but then attempts to go higher again, second Peak price reaches the same resistance level but fails to break through showing weakness.
When price breaks below the low between the two peaks, the pattern is confirmed and a downtrend is likely to follow. This pattern is most effective when it forms at a strong resistance level and after a clear uptrend; it signals that buyers have tried twice to push price higher but failed, which can lead to a trend and reversal. Now let's move on to the double bottom, which is the exact opposite of the double top. The double bottom is the opposite of the double top and signals a potential reversal from a downtrend to an uptrend. It's a powerful pattern that shows sellers are losing control and buyers are stepping in to push prices higher.
This pattern forms when price attempts to break a support level twice but fails both times. This failure indicates that sellers are running out of strength and buyers are gaining momentum. A valid double bottom has three key parts: first low price moves down and hits a support level, pullback price bounces up but then comes back down for another test, second low price reaches the same support level but fails to break below showing that sellers are weakening.
When price breaks above the high between the two lows, the pattern is confirmed and an uptrend is likely to follow. A double bottom is most effective when it forms at a strong support level and after a clear downtrend. It signals that sellers have tried twice to push price lower but failed, leading to a possible Trend reversal. The triple top is a strong bearish reversal pattern that signals a potential shift from an uptrend to a downtrend.
It's similar to the double top but instead of two peaks the market forms Three Peaks at the same resistance level before reversing. This shows that buyers have tried multiple times to push the price higher but failed indicating weakness and a possible move downward. A valid triple top consists of four key Parts: first Peak price moves up and hits a resistance level, pullback price drops slightly but then attempts to go higher again, second Peak price reaches the same resistance level but fails to break through, third Peak price makes one final attempt to break higher but fails again confirming seller dominance.
Once price breaks below the low between the Three Peaks the pattern is confirmed and a downtrend is likely to follow. A triple top is most effective when it forms at a strong resistance level after a clear uptrend; it signals that buyers have exhausted their strength and sellers are taking over. The triple bottom is the opposite of the triple top and signals a potential reversal from a downtrend to an uptrend. It's a strong bullish pattern that shows sellers have attempted multiple times to push the price lower but failed indicating that buyers are gaining control.
This pattern forms when price tests a support level three times but fails to break below it. This signals that sellers are running out of momentum and buyers are stepping in to drive prices higher. A valid triple bottom consists of four key Parts: first low price moves down and hits a support level, pullback price bounces up but then comes back down for another test, second low price reaches the same support level but fails to break below, third low price makes one final attempt to break support but fails again confirming buyer dominance.
10Whatistherelationshipbetween 'support' and 'resistance' intechnicalanalysis?在技術分析中，「支撐」與「阻力」之間的關係是什麼？Whatistherelationshipbetween 'support' and 'resistance' intechnicalanalysis?
