THE IMPORTANCE OF TRADING PSYCHOLOGY

Many skills are required for trading successfully in the financial markets. They include the abilities to evaluate a company's fundamentals and to determine the direction of a market trend. But neither of these technical skills is as important as the trader's mindset.

The recognition of patterns and its body of knowledge of how to react and what to expect helps a trader's success.

Traders are always analysing Trends and Reversals. Their eternal question for traders is Can the trend continues?. Knowing trends and trend reversals are critical for any trader’s success.

Chart patterns classification of 'Continuous' or 'Reversal' patterns helps traders to identify specific patterns and expect their outcome from current price action.

Traders move prices between key support and resistance areas (a tug of war) as their perception shifts between optimism and pessimism. This movement of price adhering to key support and resistance areas create chart patterns.

Reversal patterns exhibit a total shift of trends from bullish to bearish or bearish to bullish in a single pattern structure.

Examples of the reversal patterns are 'Head and Shoulders, Double Tops and Bottoms.
A knowledge of reversal patterns helps traders to estimate the 'end of trends' to execute trades in a timely fashion for maximum gains.

This knowledge also helps traders to time the trades in the opposite direction and to place smaller stop levels.

Here I discuss one of the key reversal patterns
Chart Pattern and present examples of them.

XAUUSD is trading a Cup & Handle Pattern on its Daily chart and the price has reached the 1st set of targets 62% 1930.601. (Note the 1st targets of the C&H pattern should be the 100% from the Low cup to the neckline breakout Height 100%: 2004.695)

Why this Throwback?
Price never makes continuous moves and pullback often happens befores the main targets are reached XAUUSD has retrace 30% before the main target 100%: 2004.695.

But Why?
Look left structure leaves clue:

Advance Harmonic Patterns are formed on every Time frames. Looking back Crab pattern was spotted few weeks before having the expectancy of a of price to move lower and stimate 38% AD: 1828.25 Crab.

Analysing further:

Cypher Pattern also in play having the
38% XC: 1851.42 cypher(where the price is currently restin).

Now What?
Stick to the main plan (C&H).

What other pattern could push the price to 100%: 2004.695?

Looking at the Daily and Weekly chart i can determine the main targets for the Advance Harmonics:
38% XC: 1851.42 cypher
38% AD: 1828.25 Crab

Now what other bullish pattern could be forming?

ABC Bullish 1844.003 ABC 50% PCZ( Price completion zone in between the Crab and Cypher
Estimate PCZ 1851.42/1828.25

Only If The price Touch and holds 38% AD: 1828.25 Crab i can estimate an EL(entry level)
.1844.003.
How ever the ABC Would have their own Fibonacci Ratios and i will be looking with no doubt about it to target 100%: 2004.695 C&H at some point.

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Lates idea

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Basically the idea come true

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Trade closed: target reached