With Autochartist, traders are able to strongly predict and react to the elements of trend, support, and resistance that make chart pattern trading possible.
In order to take full advantage of the automated trading opportunities from Autochartist, it is important to first learn about some important areas of this web-based platform's user interface.
The results column provides an emerging pattern alert such as the sample below:
Emerging patterns enable a proactive trading approach as trends are notified before the price behavior penetrates either the support line or the resistance line of the pattern. There are also some key Quality Indicators that will further confirm or filter the results based on the pattern type, trend, and price action. This way, much of the subjectivity in chart pattern trading is eliminated, making it possible to trade unbiasedly.
Traders should first note that this NZD/CHF alert shown above for a Falling Wedge is on a 15-minute intraday time frame shown on both the alert line and the chart itself. Autochartist scans periods of 15, 30, 60, 240, and 1,440 minutes.
The 15-minute chart represents the shortest timeframe that Autochartist displays sample results. The pattern type, as well as the likely direction of the pattern break, are all listed on the chart. A Falling Wedge is a popular pattern.
This Falling Wedge is the pattern that appears on the NZD/CHF short-term intraday chart. The Initial Trend reading helps confirm the present trend's strength. An initial trend value of 6-bars or higher is the best way to confirm the continuation of the trend pattern, while the maximum reading is 10-bars. As seen from the example, the reading is 3 bars, suggesting lateral volatility. However, another bar shows the transition to the trend. One more bar, though, would indicate the start of a trend.
Within your pattern filtering process, the Initial Trend reading will be one of the most essential Quality Indicators.
To summarize, emerging patterns represent proactive trading possibilities, while completed patterns represent reactive and trade management opportunities.
Filtering is critical for getting the most out of the trade opportunities that come in during the day. Each trader must be aware of the factors associated with conservative from aggressive entries.
In a 60-minute time frame, the pattern trading opportunity for NZD/USD was completed.
Take note of the following distinctions between emerging and completed patterns:
1. Whether or not the price movement had momentum when it broke the pattern (see Breakout); and
2. The Forecast Area, which will be plotted on completed chart patterns automatically.
Emerging patterns will occasionally reveal a break in the trend. This is because Autochartist updates the price on a 15-minute chart every 15 minutes.
The Breakout reading reveals the pattern's momentum in breaking through the Triangle pattern's resistance line. As can be observed, the Breakout reading is very low, at a minimum of 1-bar. This shows that when prices soar, the momentum is weak, and as a result, expectations for immediate continuation are low. Note that if the pattern breaks down before an economic event or before the opening of a financial center like Sydney or New York, it could have significant follow-through afterwards.
The last pattern shows Forecast Area (outlined), showing resistance because it is placed above the price breakdown.
The Forecast Area provides traders with trade management advice, making completed patterns valuable once an entry has been made.