Gear Head: A Tool For Finding Chart Patterns Among the Noise

In the real world, finding a chart pattern is tough. The pattern-matching tool in thinkorswim by TD Ameritrade identifies price trend needles in the stock-market haystack.

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In the many books on technical analysis, visible chart patterns seem to jump right off the page. Such is the power of selective editing. In the real world though, finding a charting pattern with a clean signal and imminent breakout is more like playing connect the dots on television static. To help sort through the haystack, the pattern-matching function in thinkorswim® Charts is a direct, clear way to identify 16 different patterns, past and present.

How To Do It

To evaluate the patterns on one of your daily charts, follow the steps below: 

For illustrative purposes only.

1 - Click the “Patterns” button in the upper right of a chart, next to Studies. Choose Select Patterns to bring up the pattern-selection menu (not shown here), where you can add any of the available pattern types. 

2 - In the new window, double-click your desired pattern to add it to the chart. The first option you’ll see is Ascending Triangles, which we’ll choose for our chart here. Double click and click “OK.”

3 - If the price action qualifies, the study will appear in the chart. Here the pink lines highlight the ascending triangles that have already formed, while the green shaded area on the right is a possible pattern formation.

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