Trendlines, Volume and FibonacciTrendlines are the simplest chart pattern you can find, but they are some of the most widely used, and for good reason.
They highlight a price trend going up, down, or sideways. Which therefore will be used for further analysis and other chart patterns, but what many people don't know are the specifics of trendlines. Firstly, widely-touched trendlines (about a month apart) perform much better than closely-touched trendlines. Trendlines with more touches also perform better than those with fewer. Furthermore, the longer the trendline the better the performance. However, steeper trendlines don't cut - performance usually lacks when trendlines get steeper.
The Gold monthly chart shows a downward channel highlighted by blue trendlines. This channel isn't the best since the breakout doesn't kick in for a couple of years, however, it would have been great for a few swing trades.
Highlighted by the blue notes are regions of high volume at valleys and peaks. Heavy volume at peaks and volumes are good indicators of support and resistance. Represented by the white horizontal lines. However, one important thing to note is that horizontal consolidation regions provide better support and resistance then peaks and valleys.
The HCR is presented by the yellow note and the highest blue note in the chart.
Also shown is the Fibonacci retracement. The Fibonacci retracements of 38%,50%, and 62% are good regions for support and resistance. A stop placement at 67% protects trades 66% of the time.
