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How can technical analysts improve pattern recognition?

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Pattern recognition is a key skill for technical analysts, who use charts and indicators to identify trends, reversals, and trading opportunities in the market. However, patterns can be subjective, complex, and dynamic, and not always lead to predictable outcomes. How can technical analysts improve their pattern recognition skills and avoid common pitfalls? Here are some tips and best practices to enhance your visual analysis and decision making.

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1 Review the basics

Before you dive into advanced or exotic patterns, make sure you have a solid grasp of the basic ones, such as support and resistance, trend lines, channels, triangles, flags, pennants, wedges, head and shoulders, double tops and bottoms, and cup and handle. These patterns are widely used and recognized by traders and analysts, and often provide reliable signals of price direction and momentum. Review the definitions, rules, and examples of these patterns, and practice identifying them on different time frames, markets, and chart types.

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Jack Bicer

Trader, Cybersecurity Expert Witness. Inventor of Multifactor Authentication (MFA) Mobile Push Login, Secure QR Login & QR Payments, Uninstall and Automatic Software Updates.
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Technical Analysis is not so hard once you understand the basics. Like music, stock charts have their own language. These techniques are documented in a Kindle Book,, "How to Read Charts and Trade". It is priced at 99 cents, the lowest price Amazon would allow. It is also free for Kindle Unlimited members. Read it on a big screen to see the charts clearly. By effectively applying these time-tested techniques, your chart reading can be over 80% accurate. All proceeds (not there is that much) go to trader education.

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2 Use multiple indicators

Indicators are tools that help you measure and interpret various aspects of price action, such as volume, volatility, momentum, trend strength, and divergence. Using multiple indicators can help you confirm or reject a pattern, as well as provide additional information and context. For example, you can use moving averages to determine the trend direction and filter out noise, oscillators to gauge overbought and oversold conditions and potential reversals, and volume indicators to assess the validity and conviction of a breakout or breakdown. However, avoid using too many indicators or conflicting ones, as this can create confusion and paralysis.

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Jack Bicer

Trader, Cybersecurity Expert Witness. Inventor of Multifactor Authentication (MFA) Mobile Push Login, Secure QR Login & QR Payments, Uninstall and Automatic Software Updates.
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Too many indicators can be confusing. I find it much better to use a couple of indicators but really understand how to use them. My favorite indicators are 8 & 21 Exponential Moving averages, Volume Profile and Bollinger Bands. Also trendlines are a gift. Draw them connecting swing highs or swing lows.

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3 Compare and contrast

One way to improve your pattern recognition skills is to compare and contrast similar or related patterns, and understand their differences and nuances. For example, you can compare a symmetrical triangle with an ascending or descending triangle, and see how they differ in terms of slope, breakout direction, and target calculation. Or you can contrast a flag with a pennant, and see how they differ in terms of shape, duration, and pole length. By doing this, you can sharpen your eye for detail and precision, and avoid misinterpreting or mislabeling a pattern.

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Jack Bicer

Trader, Cybersecurity Expert Witness. Inventor of Multifactor Authentication (MFA) Mobile Push Login, Secure QR Login & QR Payments, Uninstall and Automatic Software Updates.
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Trendlines are very powerful. But just because a trendline is penetrated, it does not mean there is a breakout. Because they are popular, it is common to see that they get penetrated and then fail, usually referred to as "Look above and Fail" or "Look below and Fail". To determine a trendline breakout, use at least a close above/below the trendline, and preferably 2 closes above/below a trendline will give you a much more reliable information.

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4 Test and backtest

Another way to improve your pattern recognition skills is to test and backtest your patterns and indicators on historical and live data, and see how they perform in different scenarios and conditions. Testing can help you evaluate the accuracy, reliability, and profitability of your patterns and indicators, as well as identify their strengths and weaknesses, limitations and assumptions, and optimal settings and parameters. Backtesting can help you simulate and analyze past trades based on your patterns and indicators, and see how they would have affected your results and performance.

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Momen Elsady

Wealth Management Expert | Financial Strategist | Advanced Options Trader
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If you want to get better at spotting patterns in your work, try testing and looking back at how you did in the past. I learned this when I was figuring out the best ways to make decisions. Testing your methods on old and current data helps you see how well they work in different situations. It's like trying them out in different scenarios to see what they're good at and where they might need improvement. Backtesting, especially, lets you pretend to make decisions in the past based on what you know now. It's like a practice run to see how your choices would have affected your results. I found this really helpful in improving my decision-making skills.

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5 Learn from others

A final way to improve your pattern recognition skills is to learn from other technical analysts, who can offer different perspectives, insights, and experiences on chart analysis and trading. You can learn from others by reading books, articles, blogs, and newsletters, watching videos, webinars, and podcasts, joining forums, groups, and communities, following experts, mentors, and influencers, and asking questions, feedback, and advice. Learning from others can help you expand your knowledge, improve your skills, and discover new ideas and opportunities.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can technical analysts improve pattern recognition?

1

2

3

4

5

6

1 Review the basics

2 Use multiple indicators

3 Compare and contrast

4 Test and backtest

5 Learn from others

6 Here’s what else to consider

Technical Analysis

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How can technical analysts improve pattern recognition?

1

2

3

4

5

6

1 Review the basics

2 Use multiple indicators

3 Compare and contrast

4 Test and backtest

5 Learn from others

6 Here’s what else to consider

Technical Analysis

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