Pattern: how to use for make money

30 בנוב׳ 2020

Can you see the green light turn on? Cross the road. Can you see it raining outside? Take an umbrella. Do you see that there is a formed pattern on the currency chart? Analyze the market, specify which pattern it is, predict the price behavior, spend your profit.

A pattern is a graphical figure on a chart created by repeating price combinations and displaying the pattern of price movement.

Classification:
Trend continuation patterns (after a pattern is formed, the price continues to move in the same trend in which it opened it).
1. Classic triangle
It is formed by two lines, one of which is located on the chart at right angles to the coordinates (level). To form a pattern, at least 4 price touches are required. And you can start trading only after the pattern is completely formed - in this case, the price breaks through the level, “fixes on it by means of a rollback and continues to grow.
2. Pennant
Here, the upper line of the figure is not the level, but that line. Both lines must not be parallel (otherwise it will be "Flag"). If a straight line is drawn from the vertex of the intersection of the lines, it should divide the line of the figure base in half. The mechanics of the pattern: 4 touches, complete formation of the pattern, rebound from the line, opening a trade.
3. Flag.
To form this figure, only three points are needed and its slope on the chart can be absolutely any. There is no need to wait for the price to form a pattern and leave the pattern. The deal is opened after the price rebounds from the third point.

Reversal patterns (change the direction of the trend after the completion of the formation)
1. Head and shoulders
Depending on the trend, it can form at local lows (in a downtrend) or highs (in an upward) price. “Neck” is a straight line at the base of the figure. After the complete formation of the pattern, we can expect the price movement equal to the size of the pattern's height: from the middle of the “neck” to the top of the “head”.
2. Double / Triple Top-Bottom
The pattern is very similar to the Head and Shoulders, with the difference that the extremes (tops of the pattern) are located approximately on the same line. The “Double Top” pattern type implies the presence of two extremums and is a “bearish” pattern - that is, after its formation, the price changes its trend from upward to downward. “Double Bottom” is on the contrary a “bullish” pattern that changes a downtrend to an uptrend.
3 Wedge
Almost like a triangle, but incomplete. Feature: slope down (downward) or up (upward). The lines of the figure intersect, but not in the foreseeable space, but if they are mentally lengthened. In a reversal pattern, prior to the formation of a pattern, there should be no momentum that determines the direction of the trend.

Do you use patterns in trading?

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