How to Read Forex Chart Patterns for Beginner Traders

The common forex chart patterns used to trade forex that beginner forex trades should know are explained below. These forex chart pattern are grouped into reversal chart patterns and continuation chart patterns.

Reversal Trading Patterns

The commonly used forex reversal chart patterns are:

Double Tops

Double tops forex chart pattern is an M shaped 2 tops or 2 peaks pattern that forms on the forex price chart during a forex upwards trend.

Double tops forex pattern is a bearish forex pattern that forms when price reaches a resistance zone.

The forex price will move upward & then dip slightly then turn up & move up to the top level where it had reached or slightly below this level then move downward again forming what is known as a double top chart pattern.

Double Bottoms

Double bottom forex chart pattern is a W shaped two bottoms or two lows forex pattern that forms on the forex price chart during a forex downward trend.

Double bottom forex chart pattern is a bullish forex pattern that forms when price reaches a support zone.

The forex price will move downward in then move upwards slightly then turn downward and move downward to the bottom level where it had reached or slightly above this level then move upwards again forming what is known as a double bottoms trading pattern.

Head & Shoulders Chart Pattern

Head & 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 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.

Continuation Chart Patterns

Continuation forex chart patterns are:

Rising Wedge or Ascending Wedge

Rising wedge is a continuation chart pattern that forms during an upwards forex trend & this forex patterns looks like a triangle forex consolidation pattern that has a rising slope that is heading upward.

Rising wedge chart pattern has rising sloping support and resistance levels and this forex pattern shows that forex prices keep moving higher & once forex prices move out of this rising wedge forex pattern the upward trend is likely to continue.

Falling Wedge or Descending Wedge

Falling wedge is a continuation chart pattern that forms during a downwards forex trend & this forex patterns looks like a triangle forex consolidation pattern that has a descending slope that is heading downward.

Falling wedge pattern has descending sloping support & resistance levels & this forex pattern shows that forex prices keep moving lower & once forex prices move out of this descending wedge forex pattern the downwards forex trend is likely to continue.

Bullish Pennant or Bearish Flag

Bullish Flag is a forex chart pattern with parallel support & resistance levels that forms during a forex upward trend and a forex continuation signal is generated when price moves above the bullish flag chart pattern & the upward trend continuation signal is generated by this continuation forex bullish flag pattern.

Bearish Pennant or Bearish Flag

Bearish Flag is a forex chart pattern with parallel support & resistance levels that forms during a forex downward trend and a forex continuation signal is generated when price moves below the bearish flag chart pattern & the downward forex trend continuation signal is generated by this continuation forex bearish flag pattern.

How to Read Forex Chart Patterns for Beginner Traders