Adam Grimes' Favorite Chart Patterns

Chart Patterns with Adam Grimes

Chart patterns are a key component of Adam Grimes' trading approach. He uses them to identify potential trend reversals and continuations. Here are a few of his favorite patterns:

Head and Shoulders

The head and shoulders pattern is a classic reversal pattern. It consists of three peaks, with the middle peak (the head) being the highest. A break below the neckline is a signal to sell.

Double Top/Bottom

A double top is a bearish reversal pattern that occurs when the price makes two equal highs. A double bottom is a bullish reversal pattern that occurs when the price makes two equal lows.

Triangles

Triangles are continuation patterns. An ascending triangle is a bullish pattern, while a descending triangle is a bearish pattern. A symmetrical triangle can break in either direction.

Flags and Pennants

Flags and pennants are short-term continuation patterns. They represent a brief pause in the trend before it continues in the same direction.

Real-World Example: GOOGL

GOOGL forms a head and shoulders pattern on the daily chart. The price then breaks below the neckline, confirming the pattern. This is a high-probability short setup. You would enter on the break of the neckline, with a stop above the right shoulder.

Chart Pattern Rules

• Wait for the pattern to be confirmed before entering a trade.
• Combine chart patterns with other forms of analysis, such as market structure and price action.