Forex chart patterns are among the most used, reliable trading signals. There are tens of chart patterns to trade but a professional trader only uses the most probable chart patterns to make trading easy and to avoid confusion. Here you can find some of the best Forex chart patterns to trade.
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These patterns are tradable in two ways. The first is at the
time when only the first few bullish or bearish candles have
formed and the move is in its half way to get matured (reach
a support or resistance level). At this time we can buy or sell
and wait until the move ends (or begins to reverse), then
close the trade with profit. However, these are short or
medium time moves and we cannot expect so many pips.
The second better use is to enter a trade when a move has
been matured and a reversal is expected. I also like
weakening and strengthening cascade patterns because they
are very reliable, stable and frequent signals and with
trained eyes they are quite predictable.
12.1.4 Head and Shoulders Pattern
Head and shoulders pattern as its name say is a price
pattern that more or less forms a portrait of a man with
head and shoulders. These are more than 80% probable
patterns and when the left shoulder and the head were
formed, the right shoulder would be a tradable opportunity.
Notice that a right shoulder to be tradable must overlap
more than 80% with the left shoulder, otherwise it will not
be a valid pattern.
Note that charting time frame is essential in detecting
patterns. For example, you may not see a triangle pattern on
a 1-hour chart but when you zoom out the same chart to 4-
hour time frame the pattern appears. So, to detect perfect
patterns you have to toggle between various time frames.
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bearish bars and the price consolidates in a very tight range
in very straight line as if it has bumped into a solid
impenetrable barrier. Solid wall or sandwich patterns are
excellent patterns to trade because they are highly probable
and easy to trade.
Figure 12.1.5.1 A solid wall (sandwich) pattern
Figure 12.1.5.2 A solid wall (sandwich) pattern
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12.1.6 Fractals
Fractals in general are regular or symmetric, self-repeating
shapes in various time scales. Fractals occur on Forex charts
and are very various in shape and size. If a fractal is
detected in the early stages (when the first or second fractal
has shaped), a trader can benefit from it. Trading fractals
needs much experience and usually only Forex professionals
can exploit them.
12.1.7 Double and Triple Top/Bottom Patterns
At support or resistance levels, prices are normally tested
two or three times before a bounce back or reversal take
place. This test and retest form double or triple bottom
patterns at support and double or triple top patterns at
resistance levels. You can use them in your trading.
Figure 12.1.6.1 A fractal
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