Rising/Falling Wedge.
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Rising wedges denote a reversal of a bullish trend, to form a bearish market scenario. Conversely, falling wedges have a bullish character. Reversal wedges occur at the end of a trend, indicating price moves in the opposite direction of the trend.
These are a type of continuation pattern, indicating that an ongoing trend will likely resume its course in the same direction. Triangles patterns come in three types: ascending, descending and symmetric. They occur in shorter timeframes, when prices, with their highs and lows, tend to converge into a narrower and tighter price area.
An ascending triangle forms when the price follows a rising trend line, and then consolidates. In the descending triangle, the lows stay on a straight line, and the highs create a downward trend line. Symmetric triangles are examples of neutral chart patterns, a breakout in either direction indicates a new trend. Will you be trading the NFP this coming Friday? These are perhaps the most popular patterns, frequently used by traders across all timeframes. The single candlestick pattern comes in two well-known formations: the hammer and the hanging man.
Hammers indicate a downtrend, in a bullish reversal movement, while the hanging man shows the peak of a price gain, indicating an increase in the number of sellers of a currency pair, against a potential number of buyers. Candlesticks also make engulfing patterns, which are useful to track sudden and strong changes in price movements. Technical analysis helps traders to make sensible decisions during live trading sessions and therefore knowing the different chart patterns you might come across is of great importance.
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How will the Spanish Congress Vote? Awesome Oscillator and Daily Pivot point strategy. The candlestick is called volume candle because it emerges when there are large trade volumes in the opposite directions in the market the uptrend of bulls and the downtrend of bears. The price should soon break through the low or the high of the volume candlestick, sending us a signal to enter a trade and work out the pattern. Train on the demo account and start making money on the real one.
Everything is quite simple! I wish you successful and profitable trades with the most common Forex chart patterns! Currently, there are many different kinds of triangles; however, they are all based on the same principle. In the common technical analysis Triangle is in the group of continuation chart patterns. It signals that the trend, ongoing before the triangle appeared, can resume after the pattern is complete.
In technical terms, a triangle is a narrowing sideways channel that usually emerges at the end of the trend. I suggest analyzing the scenarios of both upside and downside breakout on the given example.
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The target profit should be taken when the price covers the distance less than or equal to the breadth of the first pattern wave profit zone buy. A stop loss in this case might be placed at the level of the local low, marked before the resistance level breakout stop zone buy. The target profit should be fixed when the price has covered the distance equal to or less than the breadth of the first wave profit zone sell. A stop loss, in this case, should be placed at the level of the local high, preceding the support line stop zone sell.
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Triangle Chart Patterns
Statistically, 6 out of 10 triangles are broken out in the direction of the previous trend. Therefore, when trading in forex, you should be more careful about the traders, directed against the trend. The Triangle pattern is very important in the Elliott wave analysis. The Triangle pattern is thought to be one of the corrective waves of the directed cycle, it is the further evidence that the ongoing trend is more likely to resume after the pattern is completed.
This pattern is classified as one of the simplest ones, so, it is usually less efficient than the other patterns. In classical technical analysis, a Double Top formation is classified as a reversal chart pattern. That is the trend, ongoing before the formation starts emerging, is about to reverse after the pattern is complete. The pattern represents two consecutive highs, whose peaks are roughly at the same level. In the classical analysis, a Double Top works out only if the trend reverses and the price heads down; if the price hits the third high, the formation transforms into the Triple Top pattern.
A stop order can be placed a little higher than the local high, preceding the support line breakout stop zone ; however, you must remember that the formation often transforms into a Triple Top pattern. The pattern mirrors the Double Top pattern, formed in the falling market. In the classical analysis a Double Bottom pattern works out when the trend changes its course and the price is moving up; if the price hits the third low; the formation transforms into a Triple Bottom chart pattern.
You can open a buy position when the price, having broken through the resistance of the formation, reaches or exceeds the local high, preceding the resistance breakout Buy zone. A reasonable stop loss can be put a few pips below the local low, preceding the resistance breakout Stop zone.
However, you must remember that the formation often transforms into a Triple Bottom; so, it is rather risky to put you stop loss too close to the low. The pattern is the continuation of a double top. In classical technical analysis, the Triple Top is classified as a reversal chart pattern. It means the trend, ongoing before the formation starts emerging, is about to reverse after the pattern is complete. The pattern is formed when the price reaches three consecutive highs, the tops, located at about the same level.
Most often, the pattern emerges after a failed try to implement a double top pattern, and so, it is more likely to work out than the latter one. The pattern can be both straight and sloped; in the second case, you should carefully examine the bases of the tops, which must be parallel to the peaks. In the classical analysis, a triple top works out only if the trend reverses and the price is heading down; if the price hits new highs, the formation transforms into either a triangle or a flag. It is reasonable to enter a sell trade when the price, having broken through the support line of the formation the neckline , reaches or breaks through the local low, preceding the support line breakout Sell zone.
The target profit should be fixed at the distance that is shorter than or equal to the height of any top of the formation Profit zone.
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A reasonable stop loss can be set around the level as high as the local high, preceding the neckline breakout Stop zone. In the classical analysis, a triple bottom works out only if the trend reverses and the price is moving up. You can open a buy position when the price, having moved up through the pattern resistance line the neckline , and reaches or exceeds the local high, marked before the neckline breakout Buy zone. A reasonable stop loss can be put a little lower than the local low, preceding the resistance line breakout Stop zone. The pattern is a modified version of the Triple Bottom pattern.
In classical technical analysis, the Head and Shoulders is a trend reversal pattern. That is, it indicates the trend, going on before the formation emerges, is likely to reverse once it is completed. A Head and Shoulders pattern is characterized by three consecutive highs, whose peaks are at different levels: the middle peak must be the highest one head , and the others being lower and roughly equal shoulders.
However, there are some modifications of the pattern, when the shoulders are at different levels. In this case, you must make sure that the middle peak is higher than both shoulders.
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Another key feature to identify the pattern is a clear trendline, preceding the pattern appearance. The pattern can be both straight and sloped; in the latter case, you should be careful to check if the bases of the tops are parallel to the peaks. The lows between these peaks are connected with a trendline that is called neckline.
You may open a sell position when the price, having broken through the neckline, reaches or goes lower than the low, preceding the neckline breakout Sell zone. Target profit can be put at the distance that is less than or equal to the height of the middle peak head of the formation Profit zone.