Classic swing trading strategies
for stock chart patterns
How to make best stock market trades
Swing trading strategies are mostly based on technical analysis of stock market charts. Some stock market strategies typically use analysis and recognition of support and resistance levels together with candlestick chart patterns.
Another type of stock market strategy could be based on technical stock indicators like MACD, RSI etc. I personally do not use these stock market indicators. Th only technical stock indicators I use when I prepare some stock market strategy are moving averages on stock charts.Swing trading strategies can be also based on classic chart pattern trading. It’s possible to use the basic rules for stock chart pattern trading or the advanced rules of stock trading charts. Stock market online trading based can be profitable using basic rules of stock chart patterns. I use these swing trading strategies that you can read about in my
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Basic stock trading chart strategy
This type of technical trading strategy is based on a
breakout
from a specified chart pattern. Most stock
chart patterns
have a defined level of support or resistance; they could be on a horizontal level or a trendline. Here are two examples:
Cup with handle chart pattern
stock market strategy
The classic trading strategy is to
buy a breakout
at this horizontal price level. You as a trader need define the point where you consider a breakout as successful, and it is already “safe” to buy. You can use the technique of
fixed value
distance from resistance level.
This chart I traded as a breakout with entry near 40.45.
Stock market strategy
for bearish pennant in a downtrend
The basic rule for trading a bearish pennant is to sell short immediately after a breakdown of support trendline of this chart pattern. I did a short trade in GOOG based on this bearish stock chart pattern with entry near 631.50. I discussed this swing trade setup in one of this my blog post.
More stock market strategies
for stock chart patterns
There’s another possibility for stock trading on chart patterns. This option can be used when:
- A breakout style of the stock market trading strategy is too aggressive.
or
- A market is in a downtrend and does not support a long breakout.
In such a case you could choose to trade a pullback-type of trading strategy. Look at this example of MYGN chart.
It was possible to enter a swing trade after the pullback with the $40 USD level acting now as a support. Both strategies brought nice trading results. (I traded them both as a swing trade and as a position trade.) Here are results of these trades for illustration purposes.
Good stock market book
about stock chart patterns
There is really good book that describes almost every stock chart pattern. This is
Encyclopedia of Chart Patterns (Wiley Trading).
It is huge book but if you want to learn details about many stock chart pattern, then it must be included in your library of best stock trading books.
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