Working with Bullish Double Stick Patterns

In This Chapter

^ Understanding double-stick patterns that signal a trend reversal ^ Working with double-stick patterns that tell you a trend will continue

Compared to the single-stick patterns in Chapters 5 and 6, double-stick patterns are difficult to come by. But these patterns can be very powerful and profitable if you put in the time and effort to monitor them.

I tackle a number of double-stick patterns in this chapter, and each of them consists of two days. I'll refer to the first day as the setup day, and I'll call the second day the signal day. When you're looking for double-stick patterns, you'll have to start paying attention to the possibility of a pattern developing on the setup day, and you'll react (trade) if you see what you need to see on the signal day.

In this chapter I cover some double-stick patterns that signal a trend reversal and a few that signal a trend continuation. The reversal signals are more fun, because they help you to outsmart the crowd and buy near the end of a trend. The trend confirming signals are useful if you're already on the right side of a trend, or if you're considering going against a trend, and you're looking for a signal that can kindly tell you to reconsider.

If you want to go hunting for double-stick patterns, I must warn you that you're bound to suffer some disappointments. Often, you see the beginnings of a double-stick pattern on the first day, but you can get discouraged when the pattern doesn't shape up correctly on the second day. Your patience may be tested, and you may want to bag it and work only with single-stick patterns, but doing so is like playing the game without all the equipment you need to play it well.

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