Chart Pattern Validation

This chapter is for technicians and chartists, exploring some methods of incorporating COT analysis with existing methods. There are so many chart traders around that one may want to see what they are looking at. This chapter provides enough examples on the most recognizable chart patterns to enable the enthusiast to apply those techniques to even the most arcane chart picture. It gives examples of western bar charts. This chapter discusses net position and COT Index charts. Chart analysis is based in trend theory. Chart analysis centers on identifying resistance and support levels that enable objective entry and exit points with a measurable risk. Resistance is defined as a price level where sufficient supply (selling) enters the market to satisfy demand, and support is the inverse. Using the COT report, it is easy to detect commercials setting price limits, with users buying on a scale down and producers selling on a scale up.