Introduction to Forex Trading Chart Patterns
Forex trading chart patterns are visual representations of price movements over time, which can be used to identify potential trading opportunities. Here are some of the most common chart patterns in forex trading:
- Head and shoulders: This pattern typically indicates a trend reversal and consists of a peak (the head) flanked by two smaller peaks (the shoulders) on either side.
- Double top/bottom: This pattern consists of two peaks (or troughs) of similar height, indicating a potential trend reversal.
- Flags and pennants: These patterns are characterized by a period of consolidation followed by a breakout in the direction of the previous trend.
- Triangles: Triangles can be either symmetrical (indicating a period of consolidation) or ascending/descending (indicating a potential trend continuation or reversal, respectively).
- Channels: Channels are formed by connecting the highs and lows of a trend and can indicate potential buy/sell zones.