Trading guides
Plain guides to chart patterns, candlestick patterns and smart money concepts: what each one is, how to find it and how traders use it.
Smart money concepts
- Break of structure – A close beyond the last swing high or low in the direction of the trend
- Change of character – The first break of a swing against the trend – an early sign that direction may be turning
- Fair value gap – A three-candle formation that leaves a range of prices traded in one direction only
- ICT killzones – The hours of the trading day when most of the daily move is made
- Liquidity sweep – A move through an obvious high or low that triggers resting stops and then turns back
- Market structure shift – A break of the last swing against the trend, made by a fast one-sided move
- Market structure – The sequence of swing highs and swing lows that shows whether a market is rising, falling or moving sideways
- Mitigation block – A zone left by a failed swing: price could not make a new extreme, broke structure and came back
- Order block – The last opposite candle before a strong move that breaks market structure
- Smart money concepts – A way to read a chart through structure, liquidity and the zones that large orders leave behind
- Supply and demand zones – Price areas that a strong move started from – and where traders expect a reaction on the return
- Wyckoff accumulation – A trading range after a downtrend, read as large buyers building a position before a markup
- Wyckoff distribution – A trading range after an uptrend, read as large holders selling before a markdown
Chart patterns
- Ascending triangle pattern – A triangle pattern with flat resistance and rising lows, complete when price closes above the resistance
- Bear flag pattern – A sharp drop, a short bounce in a narrow rising channel and a break lower
- Bull flag pattern – A steep rise, a short pullback in a narrow channel and a breakout in the direction of the rise
- Chart patterns cheat sheet – The main reversal and continuation patterns, one line each, with links to the full guides
- Cup and handle pattern – A rounded base and a short pullback under resistance, followed by a breakout
- Descending triangle pattern – A triangle pattern with flat support and falling highs, complete when price closes below the support
- Double bottom pattern – A bullish reversal pattern with two lows at the same support, complete when price closes above the high between them
- Double top pattern – A bearish reversal pattern with two peaks at the same resistance, complete when price closes below the low between them
- Falling wedge pattern – A bullish pattern of two falling trend lines that converge, complete when price closes above the upper line
- Flag pattern – A sharp move, a short pause in a narrow channel and a breakout in the direction of the move
- Head and shoulders pattern – A three-peak reversal pattern that is complete when price closes below the neckline
- Inverse head and shoulders pattern – A three-low reversal pattern that is complete when price closes above the neckline
- Megaphone pattern – Higher highs and lower lows between two lines that move apart
- Pennant pattern – A sharp move, a small triangle of shrinking candles and a breakout in the direction of the move
- Rectangle pattern – Price moves between flat support and flat resistance until one of them breaks
- Rising wedge pattern – A bearish pattern of two rising trend lines that converge, complete when price closes below the lower line
- Symmetrical triangle pattern – Lower highs and higher lows squeeze price into a point until it breaks out
- Triple bottom pattern – Three lows at about the same price and a break above the resistance over them
- Triple top pattern – Three peaks at about the same price and a break below the support under them
Candlestick patterns
- Bearish engulfing candle – Two candles after an advance: a rising one, then a falling one whose body covers it completely
- Bullish engulfing candle – Two candles after a decline: a falling one, then a rising one whose body covers it completely
- Candlestick patterns cheat sheet – The main candlestick patterns on one page: what each looks like and what it suggests
- Doji candle – A candle that opens and closes at almost the same price – neither buyers nor sellers won the period
- Dragonfly doji – A doji with a long lower wick and no upper wick – sellers pushed price down and lost all of it
- Evening star candlestick – Three candles at the end of an advance: a long rising one, a small one above it, a long falling one
- Gravestone doji – A doji with a long upper wick and no lower wick – buyers pushed price up and gave all of it back
- Hammer candlestick – A small body at the top of the candle and a long lower wick after a decline – sellers pushed price down and buyers took it back
- Hanging man candlestick – A small body at the top of the candle and a long lower wick after an advance – the first deep sell-off inside a rising move
- Inverted hammer candlestick – A small body at the bottom of the candle and a long upper wick after a decline – the first attempt by buyers to push back
- Marubozu candle – A long body with no wicks – one side controlled price from the open to the close
- Morning star candlestick – Three candles at the end of a decline: a long falling one, a small one below it, a long rising one
- Shooting star candlestick – A single candle with a small body at the low and a long upper wick, formed after an advance
- Spinning top candlestick – A small body in the middle of the candle with a wick above and a wick below – neither side won the period
- Three black crows – Three long falling candles in a row after an advance, each opening inside the body before it and closing near its low
- Three white soldiers – Three long rising candles in a row after a decline, each opening inside the body before it and closing near its high
- Tweezer top and tweezer bottom – Two candles side by side that stop at the same price: matching highs at a top, matching lows at a bottom
Trading basics
- Breakout trading – Entering when price leaves a range or crosses a level that has held before
- Candlestick chart – Each candle shows four prices of one period: open, high, low and close
- Day trading strategies – Five common intraday methods, each with its entry, stop and target
- Death cross – The 50-day moving average crosses below the 200-day moving average
- Dow theory – Six principles about market trends that became the base of technical analysis
- Elliott wave theory – A model that describes a trend as five waves followed by a three-wave correction
- Fibonacci retracement – Horizontal levels that measure how much of a move a pullback has given back
- Golden cross – The 50-day moving average crosses above the 200-day moving average
- Heikin Ashi – Candles built from averaged prices, made to show the trend with less noise
- Perpetual futures – A futures contract with no expiry date, kept near the spot price by funding payments
- Price action trading – Trading decisions made from price itself – candles, swings and levels
- Renko chart – A chart made of equal bricks that moves only when price moves
- Risk reward ratio – How much a trade can lose compared with how much it can make
- Scalping trading – Many short trades, each taking a small price move and closed within seconds or minutes
- Support and resistance – Price areas where a move has stopped before and where traders expect a reaction again
- Swing trading – A trading style that holds a position for days or weeks to take one move inside a trend