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Friday, 6 September 2019

3 best chart patterns for traders

Forex trading with chart patterns has long been known as one of the mainstay technical analysis methods, it can be used as a naked trading strategy, it can also be combined with technical indicators.


1. Head and Shoulders Pattern
Named Justin Bennet as the number one most reliable chart pattern, Head and Shoulders (and the opposite version: Inverted Head and Shoulders) usually consist of 3 price waves.

In the Head and Shoulders (H&S) pattern, the first High (Left Shoulder) has a height that tends to be parallel to the third High (Right Shoulder), while the High is the two most prominent and has the highest point. To be valid, the Low points on this chart pattern should not be able to move steeply alias tend to be flat, so they can be outlined as Neckline. Plotted as a marker of a bearish reversal, the H&S that occurred at the end of the Uptrend are usually considered more promising.

2. Wedge Pattern
Don't get me wrong, the Wedge pattern mentioned here is not the "circle wedge" formation that we have known so far divided into Rising Wedge and Falling Wedge. Justin Bennet actually considers the Wedge pattern here as another name for the Symmetrical Triangle (symmetrical triangle) which indicates the continuation of the trend.

The pattern is marked by Highs, High prices that continue to decline, while Low levels continue to rise. You can line High and Low prices with lines that are as support and resistance. If illustrated, then the movement will conical to form a symmetrical triangle pattern, or in this case referred to as Wedge.3. Flag Pattern
Just like the previous pattern, Flag is a price pattern that signals the continuation of the trend. The shape is similar to a flag that has a pole. You can find it when the price is consolidating in a trend. Often, the formation of a Flag pattern is misinterpreted as the beginning of a reversal by novice traders. In fact, this is a moment when the buyer or seller gathers strength to continue the trend again.

The flag pattern that occurs in the middle of an Uptrend is commonly known as a Bullish Flag and has a descending flag shape. Conversely, the Bearish Flag pattern occurs in a Downtrend condition and is marked with an inverted flag shape. According to Justin Bennet, Flag pattern validation can be sought from the support and resistance that must be parallel. In addition, the size of the flag must not be greater than the length of the pole.

Also Read : Trading Tips on Sideways Conditions
Also Raed :6 Fatal Trader Mistakes

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