TOP 100 forex patterns with examples

What is a chart pattern? How to correctly identify price patterns in forex? How to correctly put stop orders? What price patterns aren’t worth relying on? Which patterns are not described anywhere else? Why don’t the authors want to share their own original patterns?

In this review, I’m going to dwell upon the technical analysis concept of price pattern. I shall also describe in detail such patterns as Double Top, Triple Top, Double Bottom, Triple Bottom, Head and Shoulders, Inverse Head and Shoulders, Triangle, Wedge, Flag, Pennant, Broadening Formation, Diamond, Spike, Volume Candlestick, Tower Top and Tower Bottom patterns, Three Crows pattern, and some others. And that’s not all! I will describe some less common chart patterns of technical analysis: Tweezers pattern, Mount pattern, Symmetric Channel pattern, Three Steps pattern, Flat Breakout pattern, I will also describe trading on price gaps.

Price pattern as a tool of technical analysis in trading

The analysis of price movements started when the price chart appeared. First charts were drawn on the graph paper, and that is when the first analysts noticed that there were some zones in the chart where the price made similar swings in different periods of time. Those were the first chart patterns. Traders called them price patterns because the first patterns looked similar to geometric objects, like a triangle, a square, a diamond. When it became available to see the chart on a computer screen and analyze longer periods of time, new patterns started to appear. Currently, there are over 1000 of price formations that are studied by graphic analysis, a branch of technical analysis.

Of course, many of them are just their authors’ imagination; but, on the other hand, that is the way, how the first and the most popular chart patterns appeared. Later, technical analysis was expanded, and the chart patterns were enriched by candlestick patterns. In the following parts, I’ll dwell upon the most common candlestick patterns and some original configurations.

Traders use chart patterns to identify trading signals – or signs of future price movements, in order to enter a trade at the right place. As I’ve already noted, the first pattern to analyze trading charts, included into technical analysis, is thought to be the Triangle pattern. So, I’ll start with it.


Triangle chart pattern

Currently, there are many different kinds of triangles; however, they are all based on the same principle. In the common technical analysis Triangle is in the group of continuation chart patterns. It signals that the trend, ongoing before the triangle appeared, can resume after the pattern is complete.

In the picture above, you can see one of the common triangles that hasn’t yet been complete at the moment.

In technical terms, a triangle is a narrowing sideways channel that usually emerges at the end of the trend. The triangle basically works out when the range of the price swings is extremely low, there emerges a momentum and the price, breaking through one of the figure’s legs, goes further in the breakout direction. I suggest analyzing the scenarios of both upside and downside breakout on the given example.

So, in classical technical analysis, a Triangle chart patterns signal that the price can move either way; fortunately, you don’t have to guess, as when the patterns develops, there are clear rules of identifying entry points.

If you trade a triangle pattern, it makes some sense to enter a buy trade when the price, having broken through the pattern’s resistance line, reached and exceeded the local highs, marked before the resistance line breakout (buy zone).

The target profit should be taken when the price covers the distance less than or equal to the breadth of the first pattern wave (profit zone buy). A stop loss in this case might be placed at the level of the local low, marked before the resistance level breakout (stop zone buy).

A sell position can be opened when the price, having broken through the pattern’s support line, reached or pressed through the level of the local low, preceding the support level breakout (sell zone). The target profit should be fixed when the price has covered the distance equal to or less than the breadth of the first wave (profit zone sell). A stop loss, in this case, should be placed at the level of the local high, preceding the support line (stop zone sell).

What can be added? Statistically, 6 out of 10 triangles are broken out in the direction of the previous trend. Therefore, when trading in forex, you should be more careful about the traders, directed against the trend.

The Triangle pattern is very important in the Elliott wave analysis. The Triangle pattern is thought to be one of the corrective waves of the directed cycle, it is the further evidence that the ongoing trend is more likely to resume after the pattern is completed.


Double Top chart pattern

This pattern is classified as one of the simplest ones, so, it is usually less efficient than the other patterns. In classical technical analysis, a Double Top formation is classified as a reversal chart pattern. That is the trend, ongoing before the formation starts emerging, is about to reverse after the pattern is complete.

The pattern represents two consecutive highs, whose peaks are roughly at the same level. The pattern can be both straight and sloped; in the latter case, you should carefully examine the tops’ bases that must be parallel to the highs.

In the classical analysis, a Double Top works out only if the trend reverses and the price heads down; if the price hits the third high, the formation transforms into the Triple Top pattern.

It makes sense to enter a sell trade when the price, having broken through the pattern’s support line, reaches or presses through the level of the local low, preceding the support level breakout (sell zone). The target profit should be fixed when the price covers the distance, shorter than or equal to the height of the formation’s either top (profit zone). A stop order can be placed a little higher than the local high, preceding the support line breakout (stop zone); however, you must remember that the formation often transforms into a Triple Top pattern.


Double Bottom chart pattern

The pattern mirrors the Double Top pattern, formed in the falling market. In the classical analysis a Double Bottom pattern works out when the trend changes its course and the price is moving up; if the price hits the third low; the formation transforms into a Triple Bottom chart pattern.

You can open a buy position when the price, having broken through the resistance of the formation, reaches or exceeds the local high, preceding the resistance breakout (Buy zone). The target profit is marked at distance that is equal to the height of the pattern’s either bottom, or shorter. A reasonable stop loss can be put a few pips below the local low, preceding the resistance breakout (Stop zone). However, you must remember that the formation often transforms into a Triple Bottom; so, it is rather risky to put you stop loss too close to the low.


Triple Top chart pattern

The pattern is the continuation of a double top. In classical technical analysis, the Triple Top is classified as a reversal chart pattern. It means the trend, ongoing before the formation starts emerging, is about to reverse after the pattern is complete.

The pattern is formed when the price reaches three consecutive highs, the tops, located at about the same level. Most often, the pattern emerges after a failed try to implement a double top pattern, and so, it is more likely to work out than the latter one. The pattern can be both straight and sloped; in the second case, you should carefully examine the bases of the tops, which must be parallel to the peaks.

In the classical analysis, a triple top works out only if the trend reverses and the price is heading down; if the price hits new highs, the formation transforms into either a triangle or a flag.

It is reasonable to enter a sell trade when the price, having broken through the support line of the formation (the neckline), reaches or breaks through the local low, preceding the support line breakout (Sell zone). The target profit should be fixed at the distance that is shorter than or equal to the height of any top of the formation (Profit zone). A reasonable stop loss can be set around the level as high as the local high, preceding the neckline breakout (Stop zone).


Triple Bottom chart pattern

The pattern mirrors the Triple Top, formed in the falling market.

In the classical analysis, a triple bottom works out only if the trend reverses and the price is moving up.

You can open a buy position when the price, having moved up through the pattern resistance line (the neckline), and reaches or exceeds the local high, marked before the neckline breakout (Buy zone). The target profit can be fixed at the level that’s as high as any of the pattern’s tops or lower (Profit zone). A reasonable stop loss can be put a little lower than the local low, preceding the resistance line breakout (Stop zone).


Head and Shoulders chart pattern

The pattern is a modified version of the Triple Bottom pattern. In classical technical analysis, the Head and Shoulders is a trend reversal pattern. That is, it indicates the trend, going on before the formation emerges, is likely to reverse once it is completed.

A Head and Shoulders pattern is characterized by three consecutive highs, whose peaks are at different levels: the middle peak must be the highest one (head), and the others being lower and roughly equal (shoulders). However, there are some modifications of the pattern, when the shoulders are at different levels. In this case, you must make sure that the middle peak is higher than both shoulders. Another key feature to identify the pattern is a clear trendline, preceding the pattern appearance.

The pattern can be both straight and sloped; in the latter case, you should be careful to check if the bases of the tops are parallel to the peaks. The lows between these peaks are connected with a trendline that is called neckline.

Common technical analysis suggests that the pattern works out only in case of the trend reversal; if the price is moving higher than the pattern’s peak, it is likely to be wrongly identified.

You may open a sell position when the price, having broken through the neckline, reaches or goes lower than the low, preceding the neckline breakout (Sell zone). Target profit can be put at the distance that is less than or equal to the height of the middle peak (head) of the formation (Profit zone). You may put a stop loss around the level of the local high, preceding the neckline breakout, or at the level of the right shoulder (Stop zone).

What should be added? The Head and Shoulders pattern plays an important part in Elliot wave analysis. It is thought that a Head and Shoulders, emerging in the chart, signals that the major cycle is coming to an end and the correction is about to start. The pattern often links wave 5 and wave A.


Inverse Head and Shoulders chart pattern

The pattern is simply the inverse of the Head and Shoulders Top in the falling market with the neckline being a resistance level to watch for a breakout higher.

In the common technical analysis, the Inverse Head and Shoulders pattern works out only in case of the trend reversal upwards, that is the price growth.

You may enter a buy position when the price breaks out the neckline and reaches or exceeds the last local high, preceding the neckline breakout (Buy zone). The target profit can put at the distance that is shorter or equal to the height of the middle peak (head) of the pattern (Profit zone). A reasonable stop loss in this case can be set at the level of the local low, marked before the neckline breakout, or at the lowest level of the left shoulder (Stop zone).


Wedge chart pattern

This formation looks like a triangle, with a single, but very important difference. A triangle forms only provided there is a clear trend. That is why the pattern can work out in either side, according to the pattern direction.

In the common analysis, the Wedge pattern is classified as a reversal pattern.

In the picture above, you can see the wedge, that formed in the EURJPY price chart not long ago.

In technical terms, the Wedge, like the Triangle, looks like a narrowing sideways channel, but the Wedge and the Triangle also differ in size. The Wedge is, as a rule, much bigger than the Triangle, and it can take months and even years to complete the formation.

So, in the classical analysis, the Wedges, as a rule, signal that the price is likely to move in the direction, opposite to the pattern; in other words, the ongoing trend is about to change its course.

It is reasonable to place a buy order when the price, having broken out the resistance line, reaches or exceeds the last local high, preceding the resistance breakout (Buy zone). Sometimes, you may lose about 3% of the price movement between the point of the resistance breakout and your entry. Target profit can be put at the distance, equal to or less than the breadth of the pattern’s first wave. A reasonable stop loss can be placed at the level of the local low, marked before the resistance breakout (stop zone).

What should be added? In technical analysis, there are a few rules to identify the Wedge pattern, which are worth observing:

1) The Wedge, as a rule, may be broken out at waves 4, 6 and each successive wave with even number. The first wave for the Wedge, like for the Triangle, is the movement that started the pattern’s developing, that is, in the direction of the ongoing trend.

2) The Wedge can be usually broken out only when the price has entered the last third of the formation. To figure it out, divide hypothetically the entire expected wedge pattern into three equal intervals; you’ll need the interval, where the support and resistance levels have met.


Flag chart pattern

This chart pattern is one of the simplest short-term patterns; so, its efficiency depends on numerous factors.

In the common technical analysis, the Flag pattern is classified as a continuation pattern. Therefore, it signals the trend, prevailing before the pattern has emerged, is likely to continue once the formation is completed.

The pattern indicates a corrective rollback, following the strong directed movement that often looks like a channel, sloped against the prevailing trend.

In the classical technical analysis, the Flag chart pattern can result only in the trend continuation.

In the picture above, you can see a Flag, sloped down, which indicates that the price is about to head upwards.

It makes sense to enter a purchase when the price, having broken out the pattern’s resistance line, reaches or exceeds the local high, marked before the resistance breakout (Buy zone). The target profit should set at the distance, not longer than the trend, developing before the pattern emerged (Profit zone). A stop order may be put at the level of the local low, preceding the resistance breakout (Stop zone).

What should be added? Technical analysis suggests a few rules to identify a Flag pattern correctly.

1) The angle between the Flag channel and the prevailing trend mustn't be wider than 90 degree.

2) The Flag channel itself mustn’t go lower/higher than a half of the preceding trend.


Pennant chart pattern

This chart pattern is a modification of the Flag, so it has the same major features.

In the common technical analysis, the Pennant pattern is classified as a continuation pattern. Therefore, it signals the trend, prevailing before the pattern has emerged, is likely to continue once the formation is completed.

This chart pattern indicates a corrective rollback, following the strong directed movement that often looks like a small triangle, sloped against the prevailing trend. A pennant in the longer timeframe is often a triangle in the short-term chart.

In the classical technical analysis, the Pennant chart pattern can result only in the trend continuation.

It makes sense to enter a purchase when the price, having broken out the pattern’s resistance line, reaches or exceeds the local high, marked before the resistance breakout (Buy zone). The target profit should be set at the distance, equal to or shorter than the trend, developing before the pattern emerged (Profit zone). A stop order may be put at the level of the local low, preceding the resistance breakout (Stop zone).


Broadening Formation pattern (megaphone pattern)

The Broadening Formation, also known as a megaphone pattern, looks like a megaphone or a reverse symmetrical triangle. Therefore, its work principles are similar to the triangle’s ones. In classical technical analysis, a broadening formation is classified as a continuation pattern, though it is most often an independent trend. It means that the trend, prevailing before the formation started, is likely to resume once it is completed.

One of the forms of the Broadening Formation is displayed in the picture above.

In technical terms, the formation looks like a broadening sideways channel that can sometimes be sloped. The pattern’s realization is based on that the price in each new local trend marks new highs and lows; so you trade the pattern to spot the price inside the formation, rather than to expect a breakout of the swings range, like it was described for triangles.

So, let’s see the examples of entry orders inside the pattern.

The formation, like a triangle, has waves inside; and they are, like in a triangle, the price movements up and down, from the high to the low.

A reasonable buy entry can be placed when the price, having reached the support level of the line, reaches or breaks through the local low, previous to the current low (buy zone 1). The target profit can be set at the level of the local high, followed by the current one, or higher (profit zone 1). A reasonable stop loss can be placed a little lower than the low, after which you entered the trade (stop zone 1).

It makes some sense to enter a sell trade when the price, having hit the resistance levels of the formation, reaches or exceeds the local high, followed by the current high (Sell zone 2). The target profit should be set at the level of the local low or lower (profit zone 2). A stop order in this case may be put higher than the local high, following which you entered the trade (stop zone 2).

What should be added? There are a few simple rules to correctly identify a Broadening Formation pattern and avoid common mistakes:

1. You should start trading inside the pattern only after wave 4 of the pattern is completed.

2. Positions in the trend direction, prevailing before the pattern started developing, are safer and are more often to reach the target profit.

3. You should put stop orders not only beyond the local lows or highs, but it also good to place them beyond the support and resistance levels of the formation, in case of false breakouts of the lines.


Diamond chart pattern

This formation is a combination of the Triangle and the Broadening Formation

In the common technical analysis, the Diamond is classified as a reversal pattern, and it is often a distorted modification of the Head and Shoulders pattern.

You enter a sell trade when the price, having passed down through the pattern support line, reaches or breaks through the local low, followed by the support breakout (Sell zone). The target profit is set at the distance equal to or shorter than the width of the biggest wave inside the pattern (Profit zone). A reasonable stop loss here will be at the local high, preceding the support line breakout (stop zone).

What can be added? There are some simple rules that will help you trade the Diamond pattern more efficiently and avoid common mistakes:

1. The pattern can seldom result in the trend continuation. In this case, you can simply trade with pending orders, or be careful to check that the pattern’s support and resistance lines are parallel to each other.

2. The most productive is the pattern, whose biggest wave is formed by a single candlestick, and the high and the low are the candlestick shadows.

3. The Diamond pattern most often appears at the end of long trends, so, you’d better look for it in the timeframes, starting from 4H and longer.


Spike pattern

A spike is a comparatively large upward or downward movement of a price in a short period of time.

The pattern usually emerges, following the state balance between supply and demand in the market.

In common technical analysis, the Spike is referred to as a reversal pattern.

The patterns starts emerging when a sharp local trend ends; the movements start slowing down and there occurs a sharp surge in volume in a thin market. This volume is instantly offset. At this point, there are two likely scenarios. First, buyer or seller, who was trying to break the flat, can just remove the volume form the market and the price will go back. Second, a bigger trade volume in the opposite direction is put against the volume of the first trader and returns the price to the former levels.

You might enter a sell trade when the price goes out of the sideways trend after the major pattern works out (Sell zone). The target profit here should be put at the distance shorter than or equal to the spike’s height (Profit zone). A reasonable stop loss can be put a little higher than the local highs of the sideways trend, marked before and after the spike (Stop zone).

What can be added? There is a number of rules that will help you trade the Diamond pattern more efficiently and avoid common mistakes:

  1. Before and after a spike emerges, there are be must short-term sideways trends (flats).
  2. Before the first flat starts, there must be a strong, clear trend that ends with the pattern.
  3. The pattern is the most efficient when the spike of the formation is made of just two candles, and it is good when it is in the timeframe, longer than H1.

I will go on the review with chart formations, resulted from Japanese candlestick charting techniques.


Volume candlestick pattern

It is a candlestick pattern that consists of just a single candle.

The pattern looks like a candle with a very small body and very long tails (wicks). The candlestick is called volume candle because it emerges when there are large trade volumes in the opposite directions in the market. Therefore, by the time of closing, the market hasn’t yet determined the new trend, as the demand and the supply are almost equal. However, the balance can’t last for a long time, and either buyer or seller finally wins, driving the price in the corresponding direction. The price should soon break through the low or the high of the volume candlestick, sending us a signal to enter a trade and work out the pattern.

You can seldom come across the pattern in the classical technical analysis, as it was discovered as early as in the 1990s, and is hardly remembered nowadays. So, in the present interpretation, the formation is rather a proprietary pattern, and I have figured out and repeatedly tested all the orders’ levels myself.

According to the pattern, you can enter trades in either direction, mostly by means of pending orders Buy Stop and Sell Stop.

You open a sell position when the price reaches or goes lower than the local low of the volume candlestick (Sell zone 2). Target profit is put at the distance shorter than or equal to the distance between the candlestick open price and its low (Profit zone 2). A stop loss in this case can be set at the local high of the volume candle (Stop zone 2).

You enter a buy trade when the price reaches or exceeds the local high of the volume candlestick (Buy zone 1). Target profit is put at the distance shorter than or equal to the distance between the candlestick close price and its high (Profit zone 1). A reasonable stop loss can be set at the local low of the volume candle (Stop zone 2).

What should be added? There is a number of rules that will help you trade the pattern more efficiently and avoid common mistakes:

1. The candlestick body should be at least tenfold less than its total length from the low to the high.

2. Each tail shouldn’t be shorter than 400 pips

3. The pattern work only in two timeframes - H4 and D1.


Tower chart pattern

The pattern is a candlestick formation that consists of 6 and more candles.

The Tower pattern is commonly referred to as a reversal pattern and most often emerges at the end of a trend.

The Tower pattern, as a rule, consists of one big trend candlestick, followed by a series of corrective bars, having roughly equally-sized bodies. After a series of corrective candlesticks is completed, there is a sharp movement via one or two bars in the direction, opposite to the first trend candlestick.

You put a sell entry when there starts emerging bar 5 and all the next bars of the correction (Sell zone). Target profit is put at the distance, not longer than the height of the first pattern’s candlestick (Profit zone). A stop loss may be set at little higher than the local highs of the sideways corrective movement (Stop zone).

What should I add? There are some rules you need to follow to increase the pattern’s efficiency and avoid common mistakes.

1. In the picture, there is one of the ways, how pattern can develop. Perfectly, the pattern should consist of 5-6 bars (1 candle of the trend, 4 bars of the correction, and 1 bar of the work-out).

2. The pattern usually works out via the fifth corrective bar, but there are some Towers that include more corrective bars. In this case, you stick to the general rules and enter the working out via the fifth bar.

3. Don’t put a stop order too close to the local highs/lows of the correction; it can be just triggered by the market noise.


Three Crows pattern (Three Buddhas)

The pattern is a candlestick formation that consists of 4 candlesticks; when you switch to a shorter timeframe, it can often look like a Flag pattern.

The Three Crow pattern is commonly classified as a continuation pattern; therefore, it is often a kind the zigzag correction.

The pattern usually comprises one big trend candlestick, followed by three corrective candles with strictly equal bodies. The candles must be arranged in the direction of the prevailing trend and be of the same colour. After the series of corrective candles is completed, the market explodes via one or two long candlesticks in the direction of the prevailing trend, indicated by the first candlestick of the pattern.

You open a buy position, when the third candle of the correction closes and the fourth one opens (Buy zone). Target profit can be put in two ways. The common rule suggests you set target profit at the distance that is less than or equal to the length of the first candlestick in the pattern (trend candlestick) (Profit zone 2). The second way suggests you take the profit when the price reaches the level of the longest upper tail of any candlestick in the pattern (Profit zone 1). A reasonable stop loss in this case can be put at the local low of the correction candle 3 (Stop zone).

What should be added? There is a number of rules that will help you trade the pattern more efficiently and avoid common mistakes:

1. The first candlestick (leg) cannot consist of more than 2 candles; it is perfect, if there is only one candle, of course.

2. Correction candlestick must have equally-sized bodies, the tail length is not important.

3. The body of the third correction candlestick mustn’t go higher/ lower than a half of the first candlestick in the pattern


Cube pattern (Golden Cube)

The pattern consists of 4 candles, and it often looks like a sideways trend, flat, in the shorter timeframe.

In common technical analysis, the Cube is classified as a continuation pattern, but it is most often a kind of the correction pattern, “flat waves”.

The Cube pattern consists, as a rule, of 4 consecutive candlesticks of equal size and alternating colors. Candles must be long enough to construct a geometrical object “Cube”. The pattern is also known as a Golden Cube, as 90% of the patterns alike occur in the XAUUSD price chart. It is quite simple to trade the pattern: when candlestick 5 opens, following four consecutive ones of equal size, you enter a trade, based on the colour of the first candlestick in the pattern. If it is red (black), you enter a sell; if it is green (white), you enter a buy.

You put a sell order when there opens candlestick 5, following four candles of the cube (Sell zone).Target profit can be put at the distance that is not longer than the trend, prevailing in the market before the pattern emerged (Profit zone). A stop loss in this case may be put at the distance, equal to the length of any cube’s candlestick, in the opposite direction of your entry (Stop zone).

What should be added? There is a number of rules that will help you trade the pattern more efficiently and avoid common mistakes:

  1. If the candlesticks are long and don’t construct a cube together, it is rather a rectangle, than a cube, and you shouldn’t trade according to the pattern.
  2. The tails of the candlesticks in the pattern don’t influence the pattern’s efficiency.
  3. The best timeframe to trade the pattern is H4.

Tweezers pattern

The pattern is a candlestick formation that consists of two or more candlesticks, which have long equal tails (wicks).

The Tweezers formation is commonly thought to be a reversal pattern that most often appears when the trend ends.

A Tweezers pattern usually consists of two or more candles, whose tails are at the same level. In addition, a tail must be as long as at least a half of the candle’s body. Tweezers, made of two candles, are the most often. The formation is a common reversal pattern and emerges quite often in the market; therefore it strongly depends on the timeframe where it is identified.

You enter a sell trade when the last candlestick of the pattern (it is usually the second one) is completed, and a new candlestick starts constructing (Sell zone). Target profit is placed at the distance, not longer than one of the tails (wicks) of the candles, comprising the pattern (Sell zone). A reasonable stop loss may be put a few pips above the local highs, marked by the candles, constructing the pattern (Stop zone).

What should be added? There is a number of rules that will help you trade the pattern more efficiently and avoid common mistakes:

  1.  In the common form, the pattern consists of two candles, but you can come across Tweezers, made up of three or more candles. In this case, a stop loss should be set at an ample distance, much higher than the tails.
  2.  If the tails of the adjacent candles don’t end at the same levels, but with a slight difference, you’d better not enter a trade, based on the pattern.
  3. Target profit for this pattern is sometimes placed at the distance, equal to or shorter than the longest candle in the pattern.

Gap pattern (Gapping play)

This pattern is not a real pattern; it is rather a strategy, based on exploiting the price gap.

The strategy is based on the idea that there are two types of price gaps in the modern market. The first one usually happens when there is a break in trading on an exchange; the second one results from fundamental factors, affecting the market. This methodology suggests exploiting the second type of gaps, that is, the gaps, emerging during trading sessions. Statistically, it is thought that most of the instruments that gap at the opening often move back towards the previous levels before trading resumes in the usual mode. In other words, the price gap is seen not as the emerging of the new trend, but rather as a short-term response of the speculators to a certain event that is likely to be instantly played by the market.

You open a buy position after the first candlestick, following the price gap, opens (Buy zone). Target profit is set at the distance that’s equal to or shorter than the gap itself; in other words you take the profit when the price rolls back to the previous close, preceding the gap (Profit zone). A stop loss can be put at the distance, equal to or longer than the gap in the direction, opposite to your entry (Stop zone).

What should be added? There is a number of rules that will help you trade the pattern more efficiently and avoid common mistakes:

  1. It is quite easy to distinguish between the needed type of gap and the one, resulted from a break in the exchange work. The second kind of gaps happens at a particular time, determined by the exchange working hours; gaps, occurring at a different time, are simply ignored.
  2. The needed gap most often happens in the intraday timeframes; that is, in the intervals, starting from H1 and shorter.
  3. It makes no sense to set a stop loss less than the target profit; you’d better put it at an ample distance.

Mount pattern

The formation is a rather rare proprietary pattern, but it often works out successfully. The pattern looks like Three Crows pattern, I’ve already described, but inverted.

The Mount pattern is commonly thought to be a reversal patter, unlike the Three Crows that is a continuation one.

The Mount pattern usually consists of one long trending candlestick, followed by three little candles of the same color as the main candlestick; that is the signal the continuation of the trend, indicated by the big candle. The little candles usually have the bodies of equal sizes. The candles must follow each other, sloped in the direction of the main trend. After the series of small candles is completed, there is a sharp price jump via one or two candles in the direction, opposite to the first candlestick in the pattern.

You enter a sell trade when there is emerging the first candlestick, following the three little ones (Sell zone). Target profit is placed at the distance that is not longer than the total length of the three little candles and one big candlestick of the prevailing trend (Profit zone). A reasonable stop loss here is set a few pips above the local high of the longest candlestick in the pattern (Stop zone).

What can I add? There are a few rules, following which you will trade the pattern more efficiently and avoid common mistakes:

  1. As a rule, the final entry candlestick must be much longer than the three preceding candles and engulf them.
  2. The pattern most often occurs in the H4 timeframe.
  3. Target profit is sometimes set at the level of the trend beginning just ahead the pattern itself.

Symmetrical Channel pattern

The formation is a price pattern that is being constructed for a long time.

The pattern represents two trends that are basically corrective to each other. The trends are usually of equal length and time of developing. The trends are most often displayed like two clear price channels. Trading the pattern is based on the idea that the trend, prevailing before the channels started developing, will be resumed by the price once the channels are completed.

In the classical analysis, the formation is a reversal pattern; but, because it is often very big, it is rather an independent trend than a part of some other one.

You open a buy position when the price breaks through the resistance line of the second channel and reaches the local high, preceding the breakout (Buy zone). Target profit may be taken when the price covers the distance equal to or shorter than the trend, prevailing before the first channel started emerging (Profit zone). A stop loss is reasonable to set at the local low inside the second channel, which was marked before the channel’s resistance had been broken out (Stop zone).

What should be added? There is a number of rules that will help you trade the pattern more efficiently and avoid common mistakes:

  1. As the pattern represents an independent trend, you’d better look for it in the timeframes, not shorter than D1.
  2. The pattern is often identified long before the second channel is completed, so you can trade inside the channel.
  3. So far, there have been recorded no cases when the pattern hasn’t worked out in the expected way; so there is no need to set stop losses, and so it makes the order less likely to be triggered by the market noise.

Three Stair Steps pattern

The formation is a classical reversal pattern.

The pattern represents one of the main trend scenarios in technical analysis. It consists of three momentums, followed by the market reversal and the correction, once they are completed. In fact, the stairs in the pattern describe the local corrective price rollbacks, after the movements in the main trend; and the third stair is already the start of the global corrective movement, which determines the pattern’s realization.

The pattern is traded according to one of the basic concepts of the trend reversal. If the trend is formed by two stairs, as it is displayed in the picture below, the pattern is thought to be complete. In this case, you need to expect the first stage of the trend reversal that starts when the global trendline is broken through (the support line). The movement from the ongoing trend’s high down to the support line breakout is the third stair of the pattern.

What should be added? There is a number of rules that will help you trade the pattern more efficiently and avoid common mistakes:

  1. The pattern is basically a part of the cycle in the wave theory; therefore the target profit should be calculated according to the basic method of the wave theory – Fibonacci levels.
  2. In some cases, when the pattern is complete in the long timeframes, it is reasonable to stay on the safe side and enter a trade after the price reaches the local high/low, following the breakout.
  3. The stairs of the pattern are often the local Flags; so you can trade them within the global Three Stair Steps pattern.

Flat Breakout pattern

The formation is rather a way to trade the price channel than an independent pattern of technical analysis. It is classified as a pattern because it steadily works out and is quite efficient.

The pattern looks like a common sideways channel that is often sloped. The channel is formed according to the price moving up and down, “from border to border”. The price movements inside the channel are called the “channel’s waves”. The pattern is based on the idea that its last wave is 50% of the basic length of the channel. You draw a hypothetical line that divides the channel into two equal parts and expect the movement that will rebound from this line, rather than break it through as a common wave. After the price rebounded from this hypothetical line, you need to expect until the price breaks through one of the channel’s borders and enter a trade in the direction of the breakout at the distance of the base channel breadth.

You open a buy position when the price, having rebounded from the hypothetical middle line, breaks through the channel’s resistance line and reaches or exceeds the last local high of the channel (Buy zone). The target profit can be taken when the price covers the distance that is shorter than or equal to the breadth of the broken channel (Profit zone). A stop loss can be placed a few pips below the last local low inside the broken out channel, (Stop zone).

What should be added? There is a number of rules that will help you trade the pattern more efficiently and avoid common mistakes:

  1. This pattern of channel breakout is quite simple and often occurs; but it is difficult to identify it, as it most often emerges in short timeframes.

  2. If the price breaks through the channel’s middle line by its tail that reaches the opposite border of the channel, but the body of this candle doesn’t break out the center line, the movement is considered to a wave and it isn’t exploited to realize the pattern.

  3. When you set stop losses, you should take market noise factor into consideration; therefore, you shouldn't enter the trades where stop loss and take profit are less than the average market noise for the instrument traded.


In conclusion, I’d like to note that all price patterns of technical analysis in forex are not the rigid laws and can be interpreted in different ways. However, the longer is the timeframe, where you are looking for a pattern, the more likely is the pattern to work out.

Nowadays, there are over a hundred of patterns, officially described and recorded in the register of technical analysis; and the new ones appear every day. If you managed to discover and define your own pattern in the chart, don’t abandon it just because it hasn’t been described before. You may have discovered a new pattern that will yield you profits. And the fact that it is known only to you, is, in fact, an advantage; for market makers won’t use it to get careless traders into a trap. To sum it up, don’t be afraid to enrich your trading tools with something new; for the best market analyst is you, yourself.

Have you discovered a new pattern, or just liked the article? Do share your observations or just write your questions or comments in the section below. I’m really eager to answer and explain.


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100 most efficient forex patterns

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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