This article will discuss the top 10 most profitable forex chart patterns you should know. Forex chart patterns help traders to determine the direction in which the forex market is heading and the best time to make trades.
What Are Forex Chart Patterns?
Forex chart patterns are the shapes in the price chart of a forex market that indicates where the price may go based on previous occurrences. These patterns are important for a trader to spot a good and profitable trading position.
How To Master Forex Patterns
Forex patterns are very important for every trader who intend to profit from price movement in the market. These patterns help to provide details on the possible location where price could reach in the forex market.
For traders to master these forex patterns, they must ensure to study these patterns, understand how to use them, and the best time to trade on them. Also, they must practice these patterns with various trading methods to determine the one that is best for them.
There are numerous forex patterns that one can study. Ensure you practice with a demo account and monitor your progress before deciding to try it on a live account.
Top 10 Most Profitable Forex Chart Patterns You Should Know
Forex chart patterns are important in trading successfully and in spotting the best position to take in the market. Below is the top 10 most profitable forex chart pattern you should know.
• Double Top
Double Top is one of the trading patterns which appears in an uptrend at a price peak. This pattern is formed by two peaks with one being a minimum. It indicates that the market would go down and selling activities should be conducted.
• Tripple Top and Tripple Bottom
The Tripple Top normally appears at an upward trend and has three price peaks. This pattern goes up three times and falls exactly three times. Once there’s a fall in the third, it’s an indication that sales should be made.
• Wedge Pattern
A Wedge pattern is formed on the highs and lows of the chart with a resistance line being created. A breakout is achieved when the chart goes below the support or above the resistance.
• Diamond Pattern
A Diamond pattern is an unusual reversal that could be formed at any trend. Once this pattern appears during a downtrend at the lows, it’s an indication that a purchase should be made.
The Flag is one of the most stable formations. A very strong upward price movement forms the “Flag Pole”, then a correction passage is formed when the price moves sideways. The correction ends when prices move above the resistance indicating that a purchase should be made.
• Head and Shoulders
The Head and Shoulders are normally formed with an uptrend at the highest price. There are mainly 3 points including a head in the middle and shoulders plus two minimums and a neck drawn between them.
Once this pattern is formed, the price is predicted to fall, so it’s an Indication that sales should be made.
• Inverse Head and Shoulders
The pattern is the opposite of “Head and Shoulders” and is normally formed at the low point of price on a downward trend.
The shoulders and head are located below the level of the neck. A breakout from this pattern indicated the rise in price and an indication that purchases should be made.
This pattern could be ascending or descending and either continues or reverses a particular trend. Its support and resistance line intersects on the right side. Sales and purchases are conducted depending on the information and trend.
• Double Bottom
This pattern normally forms a downtrend in a low zone. When this is formed and the maximum point is broken, the indication is that a trader should purchase and further sell at a higher price.
This pattern is formed by parallel support and resistance lines; it forms a passage for price movement on the chart.
Trading on this pattern is done when there’s a breakout. Any breakout above the resistance line indicates purchases should be made, while below the support line indicates sales.
Below are some of the frequently asked questions and answers on forex chart patterns.
Which Forex Strategy Is Most Profitable?
There are many forex strategies available for traders to use in their trading. The most profitable forex strategy include profit parabolic, scalping, and candlestick.
What Is The Best Pattern For Forex?
The best pattern for forex that traders and investors can use include candle stick patterns, rising/falling wedges, head and shoulders patterns, triangle patterns, and double top/double bottom patterns.
How Do I Make My Forex Profit Consistently Profitable?
If you intend to make your forex profit consistently profitable, you need to choose and continually test a specific strategy, set a risk/reward ratio, avoid using high leverage and set realistic profit targets.
How Reliable Is Flag Pattern?
The flag pattern is considered one of the most reliable patterns that traders and investors can depend on for their trading activities. There are known to provide the best position for a trader to enter a trend that has the potential of continuing.
Forex chart patterns are important Indications that forex traders and investors can utilize before entering a trade.
These patterns help one to decide either to buy or sell at a particular time. We hope this article will provide detailed information on the most profitable forex chart patterns. Kindly visit our comment section for all your questions and concerns.
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