FOREX PATTERNS
Forex Patterns frequently occur and allow a high probability trade in the forex market. Below are the most popular patterns in the forex market.
ROUNDING TOPS & BOTTOMS
Rounding tops & bottoms usually occur after an upward or downward run. It is a sign of the forex market changing direction. After the rounding top the forex market usually has a significant run downwards and the opposite applies for the rounding bottom
The strategy normally employed is to sell on the downward move of the rounding top or buy on the upward move of the rounding bottom.
DOUBLE TOPS & BOTTOMS
Double tops and bottoms also occur after extended upward or downward moves and signal a a point in the forex market that can't easily be broken. After the double top or bottom the forex symbol usually turns and runs in the opposite direction.
To trade the double top wait for the forex symbol to fall through the bottom range and proceed to sell. The opposite applies for the double bottom.
TRIANGLES AND WEDGES
Triangles and wedges occur in the forex market when the price tends to move from a wide range to a narrow range. The usually cause a strong breakout in any direction.
The best method to trade these narrowing patterns is to wait for the breakout and buy or sell in that direction.
HEAD AND SHOULDERS & THE REVERSE
The head and shoulders patterns found in the forex market consists of 3 peaks with the centre peak being the highest. The peaks on either sides being lower then centre peak and roughly the same height as each other. The support line between the peaks is called the neckline.
To trade the head and shoulders wait until the price penetrates the neckline then enter short/sell. The reverse head and shoulders is the same pattern upside down.