This part of technical analysis works perfectly. It isn't based on any complicated indicators just on past and current price action. Basic technical analysis include all methods based on drawing trend lines, recognizing sideways trends and breakouts from it. Also major and minor support and resistance levels, gaps, stoploss hunting and all things plainly visible on any price chart. Knowledge and experience in spotting and using them is vital for gaining success on any financial market around.
Trend is your friend
Don't betray your market friends
Most of people when sit before price chart with very strong up trend sells as they see that it won't go any higher. If you traded before you certainly know this course of action but let me ask you - what is the probability that trend will break just when you start to watch it? Most of people when they see situation for a first time would buy but longer they try to trade then they spend more and more time on trying to recognize top of tops or lowest bottom and buy/sell on them. I assure you that entering with trend and getting profit is much easier than spotting highest highs or lowest lows. Best places to enter with trend are of course discounts but this we will cover in one of next articles.
Formations
Price making pictures
Patterns that price movements are forming from time to time have also some importance. This part is rather difficult because patterns are rarely precise. To spot them and use them you need some experience that comes from practice only. Many traders are using chart patterns in market situation assessment both to describe big picture situation and short term decision making.
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