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Part	II
Forex	Trading
Strategies
22
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12.	Chart	Patterns	Trading	Strategy	
12.1	The	Most	Profitable	Forex	Chart	Patterns
For	many	reasons,	Forex	charts	usually	form	some	repeated
patterns.	If	you	work	with	them	and	your	eyes	are	trained	by
looking	at	them,	these	patterns	are	very	powerful	tools	to
guide	you	during	your	trades.	There	are	many	patterns	and
each	 of	 them	 has	 its	 name	 but	 to	 be	 simple	 and	 short	 I
explain	here	only	the	most	profitable	patterns	which	always
work	and	you	can	rely	on.
12.1.1	M	and	W	(Bat)	Patterns
These	 are	 the	 most	 frequent	 chart	 patterns	 and	 more	 or
less	 have	 M	 or	 W	 shape.	 Sometimes,	 one	 leg	 extends	 or
another	leg	gets	short.
Figure	12.1.1.1	A	W	(bat)	pattern
24
These	are	not	very	accurate	signals	but	they	help	you	to	get
a	rough	estimation	of	a	currency	move.
12.1.2	Triangle	(Weakening	M	and	Strengthening	W)	Patterns
Contrary	to	M	and	W	patterns,	triangle	(or	weakening	M	and
strengthening	W	patterns)	are	very	accurate	signals	(0.8	or
more	probable).	A	weakening	M	is	formed	when	an	upward
(bullish)	move	is	completed,	then	a	weaker	downward	move
(one	third	or	half	of	the	first	move)	happens	and	then	a	very
weak	 bullish	 (usually	 one	 candle)	 comes	 after	 it.	 After
completion	 of	 the	 third	 move	 you	 can	 say	 with	 a	 high
confidence	that	the	currency	price	will	sharply	drop.	This	is
the	 place	 you	 should	 sell	 the	 currency	 and	 make	 a	 nice
profit.	Strengthening	W	pattern	has	just	the	same	story	but
in	a	reverse	order.
Figure	12.1.2.1	A	triangle	pattern
28
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.
29
12.1.5	Solid	Wall	(or	Sandwich)	Pattern
This	pattern	normally	consists	of	4-8	alternate	bullish/
Figure	12.1.4.1	A	head	and	shoulders	pattern
Figure	12.1.4.2	A	reverse	head	and	shoulders	pattern
30
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
31
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
32
Figure	12.1.7.1	A	triple	top	pattern
Figure	12.1.7.2	A	double	top	pattern
33
Exercise	6.	Go	to	https://www.tradingview.com/e/	and	draw	a	few	major
currency	charts	and	try	to	realize	any	of	the	most	profitable	patterns
(triangle,	cascade,	head	and	shoulders).
13.	Price	Rejection	Trading	Strategy
As	 I	 said	 before,	 candles	 are	 the	 most	 beneficial	 visual
presentation	of	the	currency	prices.	There	are	two	types	of
candles.	 A.	 Full	 body	 candles	 and	 B.	 Pin	 bars.	 A	 full	 body
candle	is	a	candle	that	opens	exactly	at	the	beginning	of	a
time	frame	and	closes	at	the	end	of	that	same	time	frame.
So,	 the	 candle	 has	 a	 full	 body	 without	 any	 pin	 and	 its
maximum	and	minimum	prices	are	the	same	as	its	opening
and	closing	prices.
Figure	12.1.7.3	A	double	bottom	pattern
What you read is a free sample of “The Ultimate
Forex Trading System-Unbeatable Strategy to Place
92% Winning Trades.” From this book you will learn
top 8 Forex trading strategies (92% winning rate),
the best money and risk management method, high
performance trading and the best advice to control
your psychology during trades. All required tips to
become a successful trader are included in this book.
You Can Download This Book Here:

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The Most Profitable Chart Patterns To Trade Forex