There are different chart patterns that can form while trading the forex market, and they signal different things too. If one can learn these chart patterns and what they signal, then one can trade the forex market profitably. With every chart patterns that forms, you have an idea of whether to go ahead with the trade or not. One might be wondering if it is possible to learn all the chart patterns in the forex market. Well, who says you have to learn them all? All you need are those ones that are guaranteed to give you good returns and the rest can as well be none of your business.
WHAT IS A FOREX CHART PATTERN?
A forex chart pattern is a chart formation that will greatly help a trader to spot conditions where the market is ready to break out, and how long it will continue in its direction after the break out. This can help you make the right trade decision.
Here is a list of some patterns that can help any forex trader make good returns in the forex market. It will take a sometime and hard work to get them all right though.
- Double top and double bottom
- Head and shoulders and inverse head and shoulders
- Rising and falling wedges
- Bullish and bearish rectangles
- Bearish and bullish pennants
The double top forms when the market is trending either up. It signals a reversal of trends when it shows up. The best thing for traders to do at the show of this is to move down. The double bottom goes with a market that is trending downwards; its signal is reversal, and the next move is up.
Head and shoulders; mostly associated with uptrend moves. Its type of signal is reversal, and the next move is down. Inverse head and shoulders go with down trend and a reversal signal. The next move in this case is up.
The rising wedge can be seen in either a down trend or uptrend. Generally, it is to be looked out for in a trending market. Its signal can either be continuation or reversal. The nest move in this case is down. There is also the falling wedge which is similar with the rising wedge in every way except for its next move, which is the opposite.
Bearish rectangle can be seen in downtrend, its signal is continuation, and the next move is down. While bullish rectangle is seen in an uptrend, signal is also continuation, and the next move is up.
Bearish pennant is down trend, signal is continuation, and the next move is down. Bullish pennant is uptrend, signal is continuation, and the next move is down.
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