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In Forex Market, the chart pattern plays a big role to predict the future movement of
One of the main parts of Technical analysis is Chart Patterns. It is an easy trading
skill if you practice more with different market charts. Become Professional trader
♦ Triangle patterns
♦ Pennants
♦ Flag
♦ Rectangle
♦ Wedge
many other shapes formed in the price charts is known as chart patterns.
A Chart Pattern shapes are printed on all the market charts at any time. Traders
keep watching the price chart to find the patterns. Once the trader found a pattern,
then it will give the signal on where the price is going to move next?
The complexity of trading necessitates a keen eye and a sharp mind, but one thing
that can make it easier for both seasoned professionals and beginners is having a
horizontal lines, trend lines, Equidistant Channel lines, etc. Let’s see different types
of chart patterns.
Downtrend. You can spot this pattern during the price correction or retracement
For example: If the market is moving in an Uptrend, then it stops at some price and
starts to move down which is against the trend. During this time, you can identify the
Most popular continuation pattern charts are Pennants, Rectangles and Corrective
Wedges.
Pennants
Pennants shape formed in the chart during the strong trend. The market takes a
small break during the trend and it forms a pennant pattern in the chart.
Pennant looks like the shape of the symmetrical triangle, as both triangle and
pennant are bound by trendline support and resistance lines. The difference is that
pennant appears during the trend, but triangles can be formed during both trends
pennant occurs during a trend, it has the potential to push the price in the direction of
moved in the first wave of the pennant as shown in the chart picture.
After a breakout, the distance of the first wave inside the pennant should be your
Flag Pattern
Flag pattern is similar to pennant pattern. Whatever rules applied in pennant chart
The only difference between flag and pennant is, Flag looks like a small channel
between horizontal support and resistance levels. The market takes a long break
from the trend move and it keeps moving up and down between the certain price
level.
During a trend, when the price starts moving sideways forming a rectangle, another
trending move is likely to occur once price eventually breaks out of the rectangle
formation. This move is likely to be at least as big as the size of the rectangle.
bottom support of the rectangle, you can place buy trade. If the market reaches the
moving in an Uptrend, place only sell trade after breakout confirmed at the Bottom
After a breakout, the distance of the first wave inside the rectangle should be your
When the Market forms Lower highs and Lower Lows in a narrow path, it is known
Reversal Wedge pattern is similar to Corrective Wedge, the only difference is Market
will start to reverse after forming the wedge. Whereas In Corrective Wedge, the
We may not know whether the wedge is corrective or reversal until it breakout from
If the breakout happened in the trend direction, Then we can confirm it as Corrective
Wedge.
If the breakout happened against the trend, it means market starts to reverse. Then
Wedge. If the market reaches the bottom of the Wedge, you can place buy trade. If
the market reaches the top of the wedge, you can place a sell trade.
Wait for a breakout of the Wedge pattern to enter into the Long term trade. Stop-loss
Bonus: Wedge Pattern will breakout mostly at the 4th Touch of the Higher High or
After breakout confirms at the recent low level, You can enter into the trade.
The Minimum Double Top Target should be the same as the distance of the previous
After breakout confirms at the recent high level, You can enter into the trade.
The Minimum Double Bottom Target should be the same as the distance(size) of the
only difference is additionally extra one top or bottom formed in the chart.
1) Traditional Triple Top
If each Tops gap is within 9 months, then it is called “Traditional Triple Top”.
low level.
After breakout confirms at the recent low level, You can enter into the trade.
The Minimum Triple Top Target should be the same as the distance of the previous
After breakout confirms at the recent high level, You can enter into the trade.
The Minimum Triple Bottom Target should be the same as the distance(size) of the
analyst. It is a strong reversal pattern. If these patterns formed in the chart, Market
If the Head and Shoulders formed in the chart in an Inverted shape, it is known as
shoulders neckline break, the reversal will be confirmed. After breakout confirms at
the recent low level (neck level), You can enter into the trade. Let’s see the inverse
Triangle Pattern
Triangle shape formed in the chart when the market is making consolidation or
correction.
The Triangle pattern takes a long time to break out, until that you can keep buying or
1) Ascending Triangle
2) Descending Triangle
3) Symmetrical Triangle
4) Expanding Triangle
Ascending Triangle
Ascending Triangle has Higher lows, Equal highs. Ascending Triangle is formed
Descending Triangle
Descending Triangle has Lower highs and Equal lows. Descending Triangle is
Symmetrical triangles have two sides, which are approximately the same size and
the same angle. This creates a technical force equivalency, which creates the neutral
character of the formation. The image below shows how a symmetrical triangle
appears:
Expanding Triangle
Expanding Triangle is opposite of the Symmetrical Triangle. it has higher highs and
Lower Lows.
How to Trade Triangle Pattern?
You can take short term trades inside the Triangle pattern. If the market reaches the
bottom support of the Triangle line, you can place buy trade. If the market reaches
the Top resistance of the Triangle, you can place the sell trade.
Wait for a breakout of the Triangle pattern to enter into the trade.
Let’s look out the Ascending Triangle and Descending Triangle take profit targets.
How to confirm the breakout in trading? check here.
After a breakout, the distance of the first wave inside the Triangle should be your
1) Watching too many chart patterns in the same market chart creates more
confusion. It makes you think, whether you should trade this pattern or that pattern.
For instance, if you found the triangles pattern and the rectangle pattern in the same
forex chart, You may be confused when to enter and exit the trade.
2) Over drawing on the chart patterns drives you crazy while taking the decision to
enter the trade. Stick with one-time frame first, don’t draw chart patterns more on all
time frames, it gives you idea where the market is moving. But if you want to enter at
good opportunity earlier at best trade setup, you need to look for higher time frame
chart patterns first, next look for lower time frame chart patterns to confirm the
3) Draw chart patterns only at major price levels, don’t focus on drawing patterns in
forex trading tools in the chart. your chart looks so messy and busy, it will not help
you to pick the trade at the right opportunity instead it makes your mind tired and you
5) Beware of fake breakouts while trading the chart patterns, don’t take any breakout
trade unless the breakout is confirmed. Want to know, how to confirm the breakout or
avoid fake breakout in trading? Click here to see the breakout examples.
patterns. Trade forex chart pattern carefully as per the strategy on “How to trade
7) Chart patterns are not clear to draw using the candle charts when comparing to
Conclusion
Forex Chart Patterns are used for technical analysis to predict the future movement
of the market.
● Flags
● Pennants
● Rectangles
● Corrective Wedges
The most popular trend reversal chart patterns in forex are:
Neutral chart patterns, the market may break either up or down. Catching the market
after the confirmation of breakout gives you more profits with small risk.
All these forex chart patterns are traded depend on the reversal price movements
using reversal patterns and price breaks during the continuation chart pattern forex.
Forex Trading Technical Analysis got easier using the forex chart patterns. Trading
chart patterns are easier to identify the future price movement. Whether it is
continuation patterns or reversal patterns or neutral forex chart patterns, all types of
forex trading chart patterns comes under the price action trading journey.
Price action trading is one of the most successful trading strategies in fx trading. The
forex chart formations such as Triangle formations, Wedges form, rising wedge,
falling wedge, price breaks in continuation pattern, head and shoulders chart
pattern forms, Triple bottoms chart formation, Triangle formation is all noticed along
with the candlestick patterns such as bullish engulfing candle price moves, bearish
engulfing candle price move, Morning star, Evening star, pin bar, hanging man, Dojis,
tweezers, hammer, spinning tops, three black crows, three white soldiers, shooting
star are all the best candlestick patterns for all price action traders. The price trend
Whatever forex chart patterns display on your trading platform, Just find out which
pattern or Neutral chart pattern. After finding the pattern type, you can trade between
the demand and supply zone for short term entry and exits, if price breaks from the
The progress tracking of identifying the pattern and reviewing it often is very
Rising wedge, falling wedge, neckline of head and shoulders line, support and
resistance trading opportunity point the traders with best trading signals setup in the
chart.
Using chart pattern gives great browsing experience for exploring all currency pair
charts such as EUR USD, GBP USD, USD JPY, XAU USD, etc. The perfect chart
formation is visible only if you keep drawing the trendlines, horizontal support and
resistance levels.
For low risk, high reward trading opportunity, the starting point of the price move and
the price direction should be predicted using the trends and the necessary chart
formation. The stop loss order should be smaller and tight to avoid excess loss in
trading.
Check the stop level of the broker to see how much risk you can take with your
leverage option on your trading account. Some brokers offer partner center with high
IB commissions please beware of them. they are stop loss hunters due to high
spread even in major currency pair like EUR USD, USDJPY, GBPUSD.
The stop-loss order line and the ask line should be enabled on your forex broker
Forex chart patter with reversal chart and price action strategies help you to trade
important currency pairs such as EUR USD with small risk and high potential trading
The reversals and trend progress market creates heavy demand and momentum in
the markets to bring big movements and insights into the forex charts.
FAQ
What is Cyclic Double Top?
If each top gap is more than 9 months, then it is called as “Cyclic Double Top”.
Bottom”.
head and shoulder are the most used forex chart patterns by professional traders
world wide.
short term trades, if the pattern shape got broken, then you can place a long term