Forex Patterns Introduction In FX Trading

Forex Patterns use by most of currency traders, Classical figures can be both of the trend Reversal and Continuation. Classic Patterns of Reversal and Continuation of the trend always had great importance to the Forex traders and investors. A signal of the currency reaching its peak is given by the Trend Reversal figure and after this signal Reversal takes place. In such situations, the traders and investors should open a position against the direction of the previous trend. For example, if the price of a currency is at peak of the bull trend then traders and investors should place sell orders in your real currency trading account .

In the situation of the figure showing the trend continuation, the traders and investors should wait till the correction ends and then trade along the trend direction. Trading this way will help the traders and investors to earn more and more pips with less chances of loss. To the beginners, the classical figures become visible when the movement ends and at this point it will become hard for the traders and investors to earn profitable pips but if the trader is an experienced one then he can detect these type of figures when the movement begins. Distinguishing these figures needs practice. Guessing these figures is difficult for the beginners because the real figures can be mistaken as imaginative and imaginative figures can be mistaken as real figures.

Some of the classic patterns that are trend reversal are as following.

Head and Shoulders Forex Patterns

This chart is mostly found either in the middle or at the end of a trend. These patterns are of two types, one in which the trend reverses towards the upside and the other in which the trend reverses towards the downside of the chart pattern. In case of an uptrend this chart pattern can show a bearish trend reversal and in case of a downtrend this chart pattern can show a bullish Forex trend reversal.

Double Tops and Double Bottom Forex Patterns

These chart patterns are used only as trend reversals. Investors rely on this pattern because this pattern is considered as the most reliable in predicting the trend reversals.

Triple Tops and Triple Bottom Forex Patterns

This pattern is similar to the Head and Shoulders pattern. The difference between the Triple Tops and Triple Bottom and the Head and Shoulders chart pattern is that the top position of the Triple top is at same or nearly same level but the three peaks are not at same level in the Head and Shoulders pattern because Head is at the higher position than the Shoulders.

Ascending Triangle Chart Pattern

Mostly Ascending Triangle Chart Pattern is used as a trend continuation pattern but sometimes it may also be formed as the trend reversal pattern and gives bullish signals.

Descending Triangle Chart Pattern

Descending Triangle Chart Pattern is used as a trend continuation pattern but sometimes it may also be formed as the trend reversal pattern and gives bearish signals.

Some of the classical patterns that are trend continuation are as following.

Head and Shoulders chart pattern

Head and Shoulders chart pattern is also used for predicting the trend continuation.

Ascending Triangle Chart Pattern

Ascending Triangle Chart Pattern is used as a trend continuation pattern in an uptrend and gives the bullish signals.

Descending Triangle Chart Pattern

Descending Triangle Chart Pattern is used as a trend continuation pattern in an uptrend and gives the bearish signals.

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