If you're just getting started in trading, you've probably come across terms like chartism or chart patterns without knowing exactly what they mean. Let me tell you why this is important for anyone who wants to trade wisely.

Chartism comes from the English word "chart," which simply means graph. In trading, we talk about price charts that we use to make decisions. It is the fundamental tool if you prefer technical analysis over fundamental analysis. Technical analysis focuses exclusively on price movement, while fundamental analysis considers external factors like macroeconomic data or geopolitical tensions. In summary, chartism is the discipline that studies the price and volume of an asset over a period of time, trying to determine fluctuation ranges and help you choose when to enter and exit the market.

This works based on three key premises: price discounts everything, prices move in trends, and history always repeats itself.

Now, to understand chart patterns, you first need to be clear on what a trend is. A trend is the sustained direction in which a market moves. It can be bullish (higher highs and higher lows), bearish (the opposite), or sideways (no defined direction). Along with this, there are support and resistance levels: supports are lower levels where the price stops to rise, while resistances are upper levels where the price stops to fall.

Once you understand this, you can start identifying chart patterns. There are figures that warn you about trend reversals. The Head and Shoulders is probably the most famous: the price forms three peaks with a central maximum higher than the other two. When it breaks below the neckline after the right shoulder, it usually falls with a similar amplitude to the head. This is a classic pattern seen in any serious technical analysis.

Then there are double and triple tops, where you see two or three consecutive highs at the same level separated by significant lows. The price target is the height of one of those peaks. The inverse are double and triple bottoms, which indicate when it’s a good time to close a sell position. During the first bottom, volumes increase, then drop sharply, and when the second channel ends, they spike again.

There is an interesting pattern called Morning Star that indicates a trend reversal in bearish markets: a bearish candle followed by a small indecision candle and a bullish candle. The longer the period you analyze, the more reliable it is. The Hammer is another interesting figure, with a long lower wick and a square body, showing that sellers dominated at the start but buyers took over at the end.

Regarding patterns that confirm trends, triangles are high-performance tools. They form with at least two highs and two lows, requiring between 1 and 3 months. They can be ascending or descending. Triangles allow you to anticipate the price direction quite accurately, especially if there are large volumes on the breakout.

Flags are similar to channels but shorter. They imply that current movements are sustainable, representing a transitional balance between buying and selling forces. They usually form after a big sharp move. Rectangles are perhaps the most recognizable of all chart patterns, where prices fluctuate within a horizontal channel indicating equality between supply and demand.

The important thing is that chart patterns are not an exact science. You need to learn to identify and draw these levels correctly to determine the figures and trends. Past performance does not guarantee future results, so always seek independent advice before making decisions. But mastering these patterns gives you a real advantage when reading the market.