Chart patterns are formed within a chart when prices are graphed, and can be used to estimate future price movement. A very nice overview of the most common formations can be found on www.thepitmaster.com and on www.thepatternsite.com, a short introduction to fibonacci-based patterns on www.fx360.com

Some notes about chart patterns:

• The higher the timeframe on which a pattern occurs, the more likely it is correct. For example, a wedge visible on a 4 hour chart is far more reliable than one visible only on a 3 min chart.
• One should always be very careful when entering a position on a breakout of such a pattern, as breakouts often prove to be false. Especially formations like the Head and Shoulders recently seem to show more failures then successes.