If you are a beginner trader, you have probably wondered what chartism is or what technical analysis figures are. If this is your case, keep reading! In this article, in addition to explaining what chartism is, we will show the most common technical analysis figures using candlestick charts, so that your technical analysis can be as complete as possible.

In this article, you will learn about:
- What is chartism
- Trends
- Supports and resistances
- Trend continuation figures
- Trend reversal patterns

Let's get started!

**Technical Analysis Figures - What is Chartism?**

The term chartism comes from the English word 'chart', which means graph. In trading, it refers to the price charts used by traders to make decisions. It is a fundamental tool for traders who prefer technical analysis over fundamental analysis. If you are not sure about the difference between the two, here is an explanation:

Technical **analysis** is based exclusively on the movement of prices of financial assets, whether they are currencies, stocks, commodities, etc.

Fundamental **analysis** is based on external factors that can influence price movements: macroeconomic data, geopolitical tensions, unpredictable factors such as earthquakes or any natural disaster. An example would be the coronavirus pandemic, which caused declines in the stock markets.

That said, we can define chartism as follows:

> The discipline that studies the price and volume of a certain asset over a period of time

Chartism:
Try to determine the volumes of price fluctuations
Helps to choose the right moment to enter and exit the market

**How does it work?** Based on three premises:
- The price discounts everything
- Prices move in trends
- History always repeats itself

**Technical Analysis Figures - Trends**

Thanks to technical analysis figures, we can determine the direction a trend will take. But before we delve into this topic, let's see what a trend is.

A **trend** in trading is the direction in which a particular market moves sustainably over time. Prices continuously fluctuate in a downward and upward direction, determining the trend. We can distinguish three types of trends: **upward**, **downward** and **sideways**.

We talk about an upward trend when prices register an upward movement over a certain period of time, resulting in a sequence of higher lows and higher highs. The downward trend is similar but involves a downward movement. A sideways market is one that does not register a defined trend, with sideways lows and highs.

**Technical Analysis Figures - Supports and Resistances**

To better understand chartism, it is important to have clarity, just like in trends, about what supports and resistances are. When we talk about supports and resistances, we refer to the levels where the asset's price stops to continue in the opposite direction to that which it was following.

**Support**. It is the lower level where the price stops to start rising.
**Resistance**. It is the upper level where the price stops rising to begin the descent.

Depending on the times and how the price behaves when touching a support or resistance or surpassing it, we will identify one technical analysis figure or another. Of course, traders must learn to accurately identify and draw these levels in order to determine the figures and trends.

Once the basic concepts are exposed, let's see what the most used and common technical analysis figures are among traders, with an example of each one. We will start with those figures that show us a trend change. If you like technical analysis and use it to develop your trading plan, keep reading!

**# 1 Shoulder-Head-Shoulder**

Without a doubt, you have probably read a technical analysis that mentions this technical analysis figure, Head and Shoulders, as it is one of the most common and easiest to identify. In this case, the price forms three peaks: a maximum in the center that simulates the head and that is higher than the other two (shoulders), located on each side of the maximum. A break of the price after forming the right shoulder, below the neckline, indicates that the price is likely to fall by at least the amplitude of the head.

**#2 Double Top / Triple Top**

We continue with trend reversal patterns. The double or triple top pattern is characterized by having two or three consecutive highs at the same price level, separated by one or two significant price lows. The price target of this formation is the range of one of the highs.

**#3 Double Bottom / Triple Bottom**

The double or triple bottom indicates, unlike the top, when it is good to close a sale. Thanks to this figure, we can predict a trend change in a bear market, the double bottom represents the same minimum that is reached twice.

**#4 Morning Star**

This curious name of a technical analysis figure indicates a possible trend reversal in a bear market. It is formed by a bearish candle followed by a small indecision candle and a bullish candle that does not exceed the first in height. This type of pattern can be applied to any timeframe, although the longer the time, the greater the reliability.

**#5 Hammer**

The technical analysis figure of the hammer is formed by a small long lower shadow and a square-shaped body, thus giving the shape of a hammer. This pattern shows a session where sales predominated, but in the last minutes, purchases took over. It indicates a trend reversal to a bullish market, something that will be confirmed if the opening in the next session is higher.

Now that we have seen examples of technical analysis figures that anticipate a trend change, let's look at some examples of trend confirmation figures:

**#6 Triangle**

Similar to the OCO figure, the triangle pattern is a technical analysis figure widely used by forex traders. Triangles are composed of a support or resistance, as well as a trendline to establish a price target.

**#7 Flag**

Flags are figures similar to channels, but with shorter duration and amplitude. We can find two types of flags, the bullish and the bearish.

**#8 Rectangle**

The rectangle is the most recognizable of all technical analysis figures. Of course, the consolidation of the figure can lead to a continuation of the initial movement or, conversely, to a reversal of the trend.

Good Trading!

This material does not contain and should not be interpreted as containing investment advice, investment recommendations, an offer or solicitation for any transaction in financial instruments. Keep in mind that such trading analysis is not a reliable indicator of any current or future performance, as circumstances may change over time. Before making any investment decision, you should seek the advice of independent financial advisors to ensure that you understand the risks.