Bar chart patterns often introduces sizable moves in price

To many novice investors, chart patterns might as well be tea leaves. Can they really tell you anything reliable? And even if they can, how in the world do you know what to look for?

Experienced traders know that the answer to the first question is a resounding "yes." As for the second one, we at EWI are all about recognizing chart patterns. To help you get started on this path, we've put together a free Club EWI resource called How to Use Bar Patterns to Spot Trade Setups.

It's a collection of lessons in trading and pattern recognition by one of EWI's top trading seminar instructors, Jeffrey Kennedy (who is also the firm's senior commodities analyst).

Enjoy this quick excerpt -- and for details on how to read this report in full, free, look below.

Chapter 1: How To Use Bar Patterns To Spot Trade Setups
Double Inside Bars

While many of my co-workers jog, bicycle or play in bands for a hobby, I amuse myself by looking through old price charts of stocks and commodities. Let's look at a bar pattern that I call a "double inside day."

Many of you who subscribe to my Daily Futures Junctures have seen me mention this bar pattern. I think everyone should be familiar with it. Why? Because it often introduces sizable moves in price -- always a good reason for a trader to pay attention.

So let's begin with a basic definition: A double inside day, or bar, occurs when two inside bars appear in a row. An inside bar is simply a price bar with a high below the previous high and a low above the previous low.

Notice that the range of price bar number two encompasses price bar number one, and price bar number three encompasses price bar number two.

Figures 11-2 (Wheat) shows an example of double inside days and the price moves that followed. (Continued.)

Read the rest of this 15-page report online now, free! All you need is to create a free Club EWI profile. Here's what else you'll learn:

• How To Use Bar Patterns To Spot Trade Setups
• How To Make Bar Patterns Work For You
• How To Use An Outside-Inside Reversal to Spot Trade Setups

Keep reading this free report now -- all you need to do is create a free Club EWI profile.

This article was syndicated by Elliott Wave International and was originally published under the headline Learn How to Use Bar Patterns to Spot Trade Setups. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.