Forex Broker and Trading Software Reviews: CHART PATTERNS

CHART PATTERNS

Chart Patterns are patterns which occur in trading charts that help traders predict the probable direction the currency pair is likely to move. Chart patterns may form over any time frame from a couple of hours to even years. Japanese candlestick patterns also provide a reliable insight as to where the immediate direction of the currency may head. Firstly we will look at chart pattern then then candlestick patterns. Sketches have been provide to illustrate the pattern and in a following section an number of real forex chart will be provide.

Patterns can be devided into two main categories (a) Reversal pattern where the market reverse it's direction and (b) Continuation patterns where markets continues in the same direction after a period of consolidation or retracement.

REVERSAL PATTERNS

Head and Shoulders/ Inverted Head and Shoulders
Ascending and Descending Wedges
123, Higher Lows, Lower Highs
Double Tops and Bottoms
Trend lines, Support and Resistance Lines
PIVOTs
Japanese Candlestick Patterns

CONTINUATION PATTERNS

Channels/ Rectangles
Flags and Pennants
Triangles
1234s, Higher Lows, Lower Highs

REVERSAL PATTERNS

Head and Shoulders
Head and Shoulder Patterns can be normal or Inverted. The normal head consists of three peaks where the center peak is the highest while the Inverted Head and Shoulder consists of three lows with center low the lowest. A necline is drawn through the lowest point either side of the head. A break through the necline provides a "sell opportunity" With the inverted head and shoulders the necline drawn through the top of the two peaks either side of the head. A break through the necline provides a "buy opportunity".