Patterns for Trading Analysis

Your capital may be at risk. This material is not investment advice.

Fundamental Analysis

Long term investors in South Africa rely on fundamental analysis to select the stocks to invest in. This means that they do not look at the here and now of an asset, but on broad factors that could affect the stock over a long period of time.

These factors include relevant government policies, the political and financial environment and events that are happening within a company such as changes in management. These factors are unlikely to show up in a technical analysis, but they have a major role to play in the long-term performance of a stock in the market of South Africa.

Technical Analysis

Technical analysis is all about learning how to read the charts of the assets to be traded. Some of the popular patterns that a South African trader needs to master include: double top, head and shoulders, rising or falling wedge, pennant and triangle.

Mastering these patterns, though technical, can be achieved very fast, probably in a day or two. But to avoid making losses, a trader should never become over-confident about relying only on this strategy. Asking questions and researching further such as finding out what is in the news will increase the chances of success in trading in South Africa.

Used on its own, the technical analysis is not a very reliable technique and can mislead unless the South African trader has taken the time to invest in mastering fundamental analysis as well. Learning to read charts correctly does help; but a trader should not put too much trust in it, Otherwise, it could result in loss of money.

Candlestick Patterns

A candlestick represents a trading session, which could be of 15 minutes, one hour or whatever duration the trader has selected to work with. The candle has a body and a tailor wick, which comes out from either end of the candle. The body of the candle contains data of what has happened in the market throughout the entire trading session. The wick or tail shows the highest or lowest point.

There are two trends in the South African market when it comes to candlesticks; the trend continuation patterns and reversal patterns. Trend continuation patterns are false exhaustions while reversal patterns indicate exhaustion. An exhaustion candle is not a common occurrence. But when it does occur and if it is strong enough, it changes the direction of the market.

The Top 5 Binary Options Beginner Tips show that the key to using the candlestick patterns is to understand how to read the candles. The colour of the candle, its length and the length of the wick on either side of the candle are just some of the critical factors a South African trader needs to master.


A new South African trader should not get excited about a strategy and plunge into it without adequate understanding as that would be gambling with one’s money. It is wise to practise using demo accounts since no real money is traded in it. Due to this, there are no losses while one is learning.

Do not try to understand all candlestick patterns under the sun, but focus on mastering two or three such that you can easily identify them in market situations and use them to interpret the trend of the market.

The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.