How to Read Different Types of Forex Chart Patterns for Beginner Traders
Continuation Chart Patterns
Continuation Chart Patterns
Pennant forex chart pattern is a continuation pattern that looks like a symmetrical triangle in shape and is drawn using support & resistance lines.
Pennant chart pattern occur during a forex trend - either upwards trend or downwards trend. These pennant chart patterns signal consolidation periods of the forex price.
Bullish pennant chart pattern - occurs during an upward forex trend direction and this bullish pennant chart pattern shows that forex price has the potential to move upwards and continue in the overall upward forex trend direction.
Bearish pennant chart pattern - occurs during a downward forex trend direction and this bearish pennant chart pattern shows that forex price has the potential to move downwards and continue in the overall downward forex trend direction.
Continuation Chart Patterns
Forex wedge chart patterns are continuation chart patterns.
Bullish wedge forex chart pattern - Rising Wedge, Ascending Wedge, Ascending Triangle is a bullish continuation chart pattern that signals forex prices are likely to continue moving upwards once forex prices move above this rising wedge chart pattern - ascending wedge forex trading pattern.
Bearish wedge forex chart pattern - Falling Wedge, Descending Wedge, Descending Triangle is a bearish continuation chart pattern that signals forex prices are likely to continue moving downwards once forex prices move below this falling wedge chart pattern - descending wedge forex trading chart pattern.
Continuation Chart Patterns
Rectangle forex chart pattern is a trend continuation pattern & this pattern has horizontal support & resistance levels.
Bullish rectangle pattern - When a rectangle pattern forms during a forex upward trend it signals an upward forex trend move is likely to follow next once forex price breakout of this forex triangle chart pattern.
Bearish rectangle pattern - When a rectangle pattern forms during a forex downward trend it signals a downward forex trend move is likely to follow next once forex price breakout of this forex triangle chart pattern.
Reversal Chart Patterns
Double Top Chart Pattern
Double tops forex pattern is a reversal chart pattern that forms after a forex uptrend & this forex pattern forms 2 tops at approximately the same level.
Bearish Reversal Forex Signal - Double tops forex pattern is a bearish reversal forex signal.
Double Bottom Chart Pattern
Double bottom forex pattern is a reversal chart pattern that forms after a forex downtrend & this forex chart pattern forms 2 bottoms at approximately the same level.
Bullish Reversal Forex Signal - Double bottoms forex chart pattern is a bullish reversal forex signal.
Head & Shoulders Chart Pattern
Head & Shoulders pattern is a reversal forex pattern that forms at the tops of an upward forex trend. Head and Shoulders pattern is a bearish reversal chart pattern that forms after a forex upwards trend.
There is an initial peak which is the first shoulder then a slight dip in forex price, then a second higher peak which is the head then another forex price dip followed by the last peak in forex price which is the second shoulder.
The lowest points between the two forex price lows forms the neckline & the reversal forex signal from this head and shoulders pattern is confirmed once forex price moves below this neckline.
Reverse Head and Shoulders Chart Pattern
Reverse Head & Shoulders pattern is a reversal forex pattern that forms at the bottom of a downward forex trend. Reverse Head and Shoulders chart pattern is a bullish reversal chart pattern that forms after a forex downward trend.
There is an initial dip which is the first inverse shoulder then a slight peak in forex price, then a second lower dip which is the reverse head then another forex price peak followed by the last forex price dip in forex price which is the second inverse shoulder.
The highest points between the two forex price peaks forms the neck-line & the reversal forex signal from this reverse head and shoulders pattern is confirmed once forex price moves above this neckline.
Consolidation Chart Patterns
Consolidation forex Chart patterns are also known as symmetric triangles - the consolidation pattern looks like a symmetrical triangle.
Symmetrical triangle chart pattern signal a consolidation in the forex price & a forex price breakout is likely to happen on either side once the forex price breaks out of this consolidation triangle chart pattern.
Forex traders will wait for the forex price to break out in one direction before opening a forex trade in the direction of the forex price breakout.
Summary:
Continuation Chart Patterns: Pennants - bullish pennant and bearish pennant, Wedges - Ascending wedge and descending wedges and Rectangles
Reversal Chart Patterns: Double Tops, Double Bottoms, Head and Shoulders, Reverse Head and Shoulders
Consolidation Trading Patterns: Symmetrical Triangles
How to Read Different Types of Forex Chart Patterns for Beginner Traders
