There are a lot of things in trading like picking methods that work out, money, currencies, and effort. But a trader will use a common and simple method to expand his trading experience.
And that is chart patterns.
There are multiple types of chart patterns in forex trading, which really occur when the market reaches its temptation. So, in this blog, we will execute the whole details about those chart patterns which are needed in day-to-day uses.
Let's bring them out-
Head and Shoulders Pattern (H&S)
The H&S pattern changes after an uptrend and it can be a topping formation and after a downtrend, it can be a bottoming formation. A topping formation is high and follows a retracement which shows a higher high and then a lower low. Where bottoming formation is low and follows a retracement which shows a lower low and then a high low. The patterns become completed when the trendline connects both two highs or two lows.
Triangle Chart Patterns
The Triangle chart pattern is a very common pattern and occurs in short-term time frames. Especially day traders, scalpers are using triangle chart patterns. It shows the market volatility of prices with highs and lows. This chart pattern can vary in symmetric, ascending, descending for different trading purposes.
Engulfing Chart Patterns
Between candlestick and line pattern, the candlestick pattern is more informative than the line pattern. It is useful while showing more information when the price movement is engaging in all time frames. In these all candlestick patterns, particularly one which is more useful in forex trading.
Engulfing pattern is very useful because it can be spotted easily and the price action shows a strong sign and it changes direction. This pattern is also effective in trading because the price action shows strong signs while the previous candle goes completely reverse. A trader can grab a potential trend while it is executing a stopping point. In this chart, we can show that the bullish engulfing pattern indicates an upward trend.
There are various trading methods that find out all trading entries and stops by using trading patterns. In this article, we see that head and shoulder and even triangles are good for providing entries, stops, and profit targets indication. Also, the engulfing pattern is valuable for showing trend reversal and possible entries in the trend. But before explaining all, we have to learn how to read chart patterns. Proper knowledge of reading patterns will help you to determine the pattern more visually.