Phillip Futures Client Privileges

As a client of Phillip Futures, you will enjoy full access to exclusive seminars and daily market reports by our investment experts.

Please login with your Phillip Futures Account Number below.

Trade more than
300 products in over
24 exchanges with us.
Open an account

 

Autochartist Patterns And Indicators

Autochartist is an extremely handy tool for traders. It can help you to identify opportunities to make the right trades and give you the edge that you need to boost your trading profits.

The primary benefit that Autochartist provides is that the tool’s software is constantly scanning the markets. The moment the algorithm spots a development that could make money for you, it passes on the message instantly. If you familiarise yourself with Autochartist’s features and learn to use its interface well, you are likely to see an immediate improvement in your trading results.

Let’s examine the patterns and indicators that Autochartist provides and see how to use them.
 

Ready to use Autochartist and test out these indicators yourself? Sign up for a free MT5 demo accountnow.Here are brief guidelines on:

Channel up/down

You can use channels to make profitable trades. A channel is essentially the range between which prices are moving. You could have an ascending (up) channel or a descending (down) channel.

Here’s an example of an ascending channel:

Ascending channel

So, how do you trade a channel? Let’s continue with the example of an ascending channel. You can take a long position when the price touches the lower trendline. Close the trade at the upper channel line. This strategy can maximise your returns.

Remember to use the stop-loss carefully. In this example, you could position the stop-loss at a point that is a little lower than the lower trendline.

If you’re making trades based on channel lines, there is another point to bear in mind. The difference in price between the parallel lines that represent the upper channel line and the lower trendline should be reasonably wide. This will ensure that you can make a profitable trade.

Ascending and descending triangles

Prices form a triangle when the price range sees a reduction over a specific timeframe. As the swings become subdued, a triangle forms. An ascending triangle is said to have formed when the lower trendline shows an upward movement, and the upper line remains horizontal.

Here’s a visual representation of an ascending triangle:

 

Ascending triangle

A descending triangle, on the other hand, is one where the lower trendline is flat, and the upper line is trending downwards.

How do you trade a triangle? You have to try and identify the breakout price. Remember that if the price rises above the upper trendline, this could be an indication that it will increase even more.

However, when you place your trade, it is essential to position your stop-loss with some accuracy. A good principle to follow when you are trading an upside breakout is to keep your stop-loss a little lower than the lower trendline. This will minimise your losses in the event the trade moves against you.
 

Learn more about Autochartist with hands-on experience. Register for your own MT5 demo account.

 

Rising/falling wedges

A wedge always indicates a pause in the price movement. A rising wedge is said to take place when the price movement shows a consolidating pattern between an upward sloping support and a resistance line.

Here’s a visual representation of a rising wedge:

 

Rising wedge

How do you trade a rising wedge? It’s advisable to opt for a short trade at a point when the price moves below the lower trendline. When you do this, you should position your stop-loss a little higher than the highest point of the closest high within the wedge formation.

A rising wedge is positioned upwards as you can see in the illustration above. A falling wedge takes the opposite position. It will point downwards.

A fundamental principle to keep in mind is that a rising wedge usually indicates that prices will move lower while a falling wedge says the exact opposite – prices will move higher.

Head and shoulders

This illustration will explain why the pattern is called “head and shoulders.”

Head and shoulders

Source – Investopedia

The “head” in the illustration is the highest price point. Observe the price movement to the left and the right of the “head”. Both are a little lower than the “head”. These are the “shoulders” of the pattern.

Another indication of a head and shoulders pattern is that it is characterised by three peaks. The middle peak is the highest.

How does this pattern help you to decide on the trade to be made? You can see that the two shoulders are connected by a horizontal trendline. It is at these points, which are also referred to as the neckline, that there could be a trend reversal. So, for example, a move below the neckline could indicate the probability of a downtrend.

Double bottom/top

A double top occurs when the price tries to break through a particular resistance level and fails to do so. It then tests the same level once again. But this attempt too is unsuccessful. This results in the formation of a double top.

This is what a double top could look like:

 

Double top

A key feature of this pattern is that the top of the second increase is unable to surpass the level of the first. This usually indicates that a reversal is going to take place. Have a look at the illustration above. After the second peak, there is a sharp fall in the price.

When a double top pattern emerges, your trade should anticipate a decrease in price. The uptrend is likely to be replaced with a downward movement.

But is that always what happens? Unfortunately, it isn’t. There could be a triple top pattern as well. However, it’s useful to know that triple tops aren’t as common as double tops.

The bottom line

How can Autochartist help you use these patterns to improve your trading results? The tool identifies these patterns for you in real time. You don’t need to learn how to look for them on your own. Additionally, there is no necessity of carrying out complicated calculations. Autochartist does that and presents you with actionable information through its web interface.

 

The best part is that the tool’s pattern recognition capability works continuously in the background providing you with multiple trading opportunities. If you use these well, it could lead to a significant improvement in your overall trading profitability.