The 8 Second Chart Decoding Trick – No Indicators Needed!

Video Transcript:

Hello everyone, it’s Dale here. In this video, I’d like to teach you a skill—how to read and evaluate any chart in just a couple of seconds. When you look at any chart, it really consists of just three things or patterns: the price is either in a rotation, like here, or the market is trending, like here, or there is a swift rejection of either higher or lower prices, like in this example. Those are the three patterns present in every chart, regardless of the time frame or trading instrument. Every chart consists of just these three patterns, nothing else. Learning to recognize this can give you a huge edge in your trading.

Let’s go over a few examples of these patterns, and I’ll do some drawings here. Right here, there’s a rejection of higher prices. So, that’s a rejection. We also have rejections here, here, and here. Now, let me highlight the rotations. There’s a rotation here, another here, a small rotation within this trend, and one here as well. Now, what remains are the trends. We have a trend here, here, here, here, and here. As you can see, we’ve named each part of the chart using just three patterns: rotation, trend, and rejection. This is how we can break down any chart into these easy-to-see patterns.

Now, some patterns appear very often, and some are rare. For example, rotations, like here, make up 70-80% of the time across different time frames and trading instruments. Trends make up about 20-30% of the time, and rejections are rare, occurring only occasionally.

Each pattern has meaning. When there’s a rotation, the price is telling us that the market is in equilibrium, meaning sellers and buyers have found a fair price. This area is a fair price zone where both buyers and sellers are content to trade, at least temporarily. In rotations, heavy volumes are often traded. Using the volume profile, we can see that wider sections indicate where heavy volumes are traded, usually within rotations. Big institutions often accumulate their trading positions in rotations to do so unnoticed. They need time and liquidity, which is available in a balanced rotation.

Another key point is that the longer a rotation, the stronger the trend that typically follows. The longer the rotation, the stronger and longer the subsequent trend—keep this in mind because it’s a valuable insight.

When it comes to trends, they don’t occur as often as rotations. A trend tells us that one side of the market is far more aggressive than the other. In this downtrend, for example, sellers are more aggressive than buyers, pushing the price downward with market sell orders.

Now, for rejections, here’s an example of a strong rejection of higher prices. This shows that buyers pushed prices up aggressively, but sellers jumped in and pushed it down. This marks an important level in the market, as it was aggressively defended by sellers, making it a potential resistance zone in the future.

Let’s look at more examples to make these patterns easier to identify. We’re currently looking at a EUR/USD 30-minute chart. In some cases, you can see the big picture as a single large trend or break it down into smaller sections with rotations and trends—both approaches work; it depends on how detailed you want to be.

This analysis works on any time frame and trading instrument. Let’s switch to the ES 5-minute chart. On faster time frames, changes can be more frequent, so identifying patterns can be a bit harder. But here, we see a rotation, a big rotation, and the rest as trends and rejections.

Now, let’s look at a Gold daily chart. On higher time frames, the market tends to be calmer, making patterns easier to recognize. Here, we see a long rotation followed by a trend, and before this trend, another rotation. Higher time frames generally make it easier to spot these patterns.

Now, let’s discuss how you can use these patterns in your trading. You can build your strategy around them. For example, in a rotation, you could trade from the rotation’s extremes toward its center. This means shorting from the upper boundary and going long from the lower boundary, with a target in the center. But remember, after a rotation, a trend is likely, so the longer the rotation, the more vigilant you should be.

When the market trends, you might switch to a breakout strategy or, as I prefer, jump into the trend on a pullback. For instance, after a pullback, this spot would be a long entry opportunity, and then another entry on the next pullback—waiting for the market to offer a “discount” before joining the trend.

Finally, with rejections, such as this example on the ES, we see a strong rejection of lower prices, indicating a defended support zone. When the price returns to this support, it could bounce, offering a long entry. Alternatively, if it breaks through, it signals that sellers are strong, and you might consider going short, as they’ve overpowered this support level.

These are the three patterns you can use to read any chart in just a few seconds. At first, identifying them may take time and practice, but it’s a valuable skill to develop. I highly recommend learning to recognize and use these patterns in your trading.

I hope you enjoyed this video. Don’t forget to hit the subscribe button so you don’t miss out on my new videos. If you’d like to learn more about my trading methods and specific strategies, visit my website at Trader-Dale.com. Go to the “Trading Course and Tools” section, where you can explore my trading education and custom-made tools. And if you want to take your trading to the next level and connect with me and other pro traders daily in a live trading room, check out the Funded Trader Academy page. There’s a video explaining everything.

Thanks for watching, and I’ll see you next time. Until then, happy trading!