Charting Guidelines

There are several guidelines to keep in mind when trying to identify chart patterns.

• Reading and interpreting stock charts is an art not a science.
• Real stocks almost never make nice neat easily identifiable patterns on chart .
• Always wait for a breakout to confirm a stock chart pattern. Just because the stock chart pattern may appear as if it's forming a particular pattern, it's not valid until there is a breakout.
• A particular stock chart pattern does not guarantee the stock will behave in a certain way. It only increases the odds that it will.
• Always read charts in the LOG format rathar than linear format.
• The same principles that apply to daily charts can be applied to weekly and monthly charts.
• Don't try and force yourself to see a pattern if it's not there.
• Never bet the farm on any stock chart pattern.