Commonly Used Forex Chart Patterns Traders Laboratory

Post on: 10 Июнь, 2015 No Comment

Commonly Used Forex Chart Patterns Traders Laboratory

In the Forex market, there are particular Forex chart patterns that appear from time to time. These Forex chart patterns usually signify the mass psychology of the currency market. It is therefore of paramount importance to know how to identify these charts since this will save you significant time as well as effort in your trading. When you master the art of reading chart patterns in the Forex market, then you are at a better position to make big returns from your investments in the Forex market.

Knowing how to analyze Forex chart patterns will literally take your trading career a quotient higher. It is worth mentioning that you should scrutinize the chart patterns in different time frames so as to add strength on the trading decision you will make. Forex chart patterns are very useful in helping traders to figure out when a break out is about to happen in the market. In addition, chart patterns can help in pointing out whether the existing trend will be maintained in the market or a change in trend is imminent.

Whereas there is an array of Forex chart patterns, in this article we are going to discuss one of the most common chart patterns used in the market. These are the triangle chart patterns. These charts are commonly used in the Forex market because they give a relatively simple method for trading in currencies.

Triangles Chart Patterns

Triangle chart patterns can be ascending, descending or symmetric and are especially common on short term time frames. A symmetrical triangle pattern is formed when the lower and the upper trend lines representing the lows and the highs candlesticks, form higher lows and lower highs and then converges to form a triangle.

The resultant slopes of the 2 trend lines are symmetrical. It is worth mentioning that in a symmetrical triangle chart pattern, the currency price can break out in either bearish or bullish direction; there is no bias towards the breakout direction.

The descending triangles are usually formed when the horizontal lower trend line and upper trend line forming the downward slope converge. Unlike the symmetrical triangle which can either be bearish or bullish, a descending triangle is a bearish break out formation. This being the case the bearish price action in essence outperforms the bullish price action in the market.

Commonly Used Forex Chart Patterns Traders Laboratory

On the other hand, ascending triangle chart pattern is formed when the lower trend line that forms the upward slope and the triangle base converges. This chart patterns shows a bullish break out pattern where bullish price action outweighs bearish price action.

Though chart patterns appear slightly different for trading purposes, there is very minimal difference. Triangle chart patterns usually occur when the prices of currencies converge with the highs and lows narrowing into a tighter and tighter price space.

Application of Triangle Chart Patterns in the Forex Market

Triangle chart patterns are easy to recognize on the Forex charts since they mostly take sometime to form before the price action breaks out in the market. This said, the best way to trade in the Forex market using triangle chart patterns is to trade the break outs. For advanced and highly experience Forex traders, they can trade the price action that falls within the boundaries of the triangle. This is risky and therefore not good for novice traders and traders with inadequate experience. However these traders can trade break outs and make good money from their trading. It is highly recommended that the novice traders first use demo trading platforms to sharpen and improve their trading skills using these chart patterns before trading on a real platform.


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