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Price Patterns – Day 6

Fundamental analysis tells us what stocks are capable of but does not tell us just how high or low stock prices will go or just when they will peak or bottom out. Whether one is trading stocks directly or trading derivatives as in options trading or futures trading, timing is of utmost important in gaining trading profits. Stock price pattern analysis tells the trader what the market is about to do. Using technical analysis tools such as Candlestick pattern formations traders can, in the words of Candlestick traders, let the market tell them what the market will do. Stock price pattern analysis works because stock price patterns repeat themselves, especially in large and fluid markets. Although everyone can do the fundamental analysis on a stock not all will trade that information the same. In addition, traders react to market movement and commonly drive a stock price higher or lower than the stock fundamentals dictate. It is from the ebb and flow of stock prices that stock price pattern analysis leads to profits.

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