HOW TO TRADE FOREX CHART PATTERN PERFECTLY WITHOUT LOOSING TRADE!
The Head and Shoulders Top marks a "reversal" pattern in an uptrend market and is extremely popular among currency traders.
The pattern consists of 2 Shoulders, 1 Head and the Neckline (support):
1) The first point - the left shoulder - occurs as the price of the currency pair in a rising market hits a high and then fall back to the neckline.
2) The second point - the head - happens when prices rise to an even higher high and then fall back again to the neckline.
3) The third point - the right shoulder - occurs when prices rise again but don't hit the high of the head.
4) A key element of the pattern is the neckline and can be horizontal, slope up or slope down and is formed by drawing a line connecting two low price points of the formation.
What does a Head & Shoulders Top reversal pattern look like?
The pattern is complete when support provided by the neckline is "broken." This occurs when the price of the currency pair, falling from the high point of the right shoulder, moves BELOW the neckline.
Currency analysts will often say that the Head & Shoulders top pattern is not confirmed until the currency price closes below the support neckline - it is not enough for it to trade below the support neckline.
Please note: The Head & Shoulders Top looks similar to a but reverse.
How to trade this pattern?
Go short when the currency price CLOSES below the neckline and put a stop-loss few pips above the last peak (right shoulder).
Use a risk reward ratio 1.5 or better to calculate your profit target.(if you risk 50 pips, your target should be at least 75 pips).
Chart example
EUR/USD 1 Hour Head & Shoulders Top reversal pattern
Please note that the Head and Shoulders Top formation does not need to be perfectly symmetrical.
TRIPLE BOTTOM CHART PATTERN
Triple Bottom formations are reversal patterns with bullish bias, this pattern is not often seen in the forex market (also note Triple Tops, Double Bottoms and Double Tops). Triple Bottoms are identified by three consecutive lows of similar (or almost) height with 2 moderate pull backs up in between (neckline peaks).
The triple bottom can be a major reversal pattern (if found on a daily chart or bigger timeframe) that can be formed after an extended downtrend. This pattern is confirmed when the currency pair price breaks from (it's third bottom) below through the neckline, the most likely price direction is now UP.
What does a Triple Bottom formation look like?
A triple bottom formation is a distinct chart pattern characterized by a rally to a new low (bottom1 or support1) followed by a moderate pull back up (10 -20%) to the neckline (resistance level), a second rally to test a new low ( bottom2 or support2) followed by a moderate pull back up(10 -20%) to the neckline (resistance level) and finally a third rally to test a new low ( bottom3 or support3).
The three lows (bottoms or support levels) are at approximately the same price level. What follows is a pull back up to above the neck line (resistance).
How to trade this pattern?
Go long above the Neck Line (resistance level) when the currency pair price breaks from (it's third bottom) below, the most likely price direction is now UP. Place your stop couple of pips below it's third bottom price!
Your target must be at least twice the distance from it's third bottom break to the neckline.
Example: If the third bottom price is at 1.2300 and the neckline is at 1.2400, your target level must be at least 200 pips when trading the break out!
Chart example
USD/JPY Daily Chart Triple Bottom reversal chart pattern
Double Top formations are reversal patterns and often seen to be among the most common (together with double bottom formations) patterns for currency trading. Double Tops are identified by two consecutive peaks of similar (or almost) height with a moderate pull back in between (neckline).
The double top can be a major reversal pattern (if found on a daily chart or bigger timeframe) that can be formed after an extended uptrend. This pattern is confirmed when the currency pair price breaks from (it's second peak) above through the neckline, the most likely price direction is now DOWN.
What does a Double Top Formation look like?
A double top formation is a distinct chart pattern characterized by a rally to a new high (peak1 or resistance1) followed by a moderate pull back (10 -20%) to the neckline (support level) and a second rally to test a new high ( peak2 or resistance2) again.
The two peaks (highs or resistance levels) are at approximately the same price level. What follows is a pull back to below the neck line (support).
How to trade this pattern?
Go short below the Neck Line (support level) when the currency pair price breaks from (it's second peak) above, the most likely price direction is now DOWN. Place your stop couple of pips above the second peak price!
Your target must be at least twice the distance from it's second peak break to the neckline.
Example: If the second peak is at 1.2500 and the neckline is at 1.2425, your target level must be at least 150 pips when trading the break out!
Chart example
GBP/USD 1 Hour Double Top reversal chart pattern
The Head and Shoulders Top marks a "reversal" pattern in an uptrend market and is extremely popular among currency traders.
The pattern consists of 2 Shoulders, 1 Head and the Neckline (support):
1) The first point - the left shoulder - occurs as the price of the currency pair in a rising market hits a high and then fall back to the neckline.
2) The second point - the head - happens when prices rise to an even higher high and then fall back again to the neckline.
3) The third point - the right shoulder - occurs when prices rise again but don't hit the high of the head.
4) A key element of the pattern is the neckline and can be horizontal, slope up or slope down and is formed by drawing a line connecting two low price points of the formation.
What does a Head & Shoulders Top reversal pattern look like?
The pattern is complete when support provided by the neckline is "broken." This occurs when the price of the currency pair, falling from the high point of the right shoulder, moves BELOW the neckline.
Currency analysts will often say that the Head & Shoulders top pattern is not confirmed until the currency price closes below the support neckline - it is not enough for it to trade below the support neckline.
Please note: The Head & Shoulders Top looks similar to a but reverse.
How to trade this pattern?
Go short when the currency price CLOSES below the neckline and put a stop-loss few pips above the last peak (right shoulder).
Use a risk reward ratio 1.5 or better to calculate your profit target.(if you risk 50 pips, your target should be at least 75 pips).
Chart example
EUR/USD 1 Hour Head & Shoulders Top reversal pattern
Please note that the Head and Shoulders Top formation does not need to be perfectly symmetrical.
TRIPLE BOTTOM CHART PATTERN
Triple Bottom formations are reversal patterns with bullish bias, this pattern is not often seen in the forex market (also note Triple Tops, Double Bottoms and Double Tops). Triple Bottoms are identified by three consecutive lows of similar (or almost) height with 2 moderate pull backs up in between (neckline peaks).
The triple bottom can be a major reversal pattern (if found on a daily chart or bigger timeframe) that can be formed after an extended downtrend. This pattern is confirmed when the currency pair price breaks from (it's third bottom) below through the neckline, the most likely price direction is now UP.
What does a Triple Bottom formation look like?
A triple bottom formation is a distinct chart pattern characterized by a rally to a new low (bottom1 or support1) followed by a moderate pull back up (10 -20%) to the neckline (resistance level), a second rally to test a new low ( bottom2 or support2) followed by a moderate pull back up(10 -20%) to the neckline (resistance level) and finally a third rally to test a new low ( bottom3 or support3).
The three lows (bottoms or support levels) are at approximately the same price level. What follows is a pull back up to above the neck line (resistance).
How to trade this pattern?
Go long above the Neck Line (resistance level) when the currency pair price breaks from (it's third bottom) below, the most likely price direction is now UP. Place your stop couple of pips below it's third bottom price!
Your target must be at least twice the distance from it's third bottom break to the neckline.
Example: If the third bottom price is at 1.2300 and the neckline is at 1.2400, your target level must be at least 200 pips when trading the break out!
Chart example
USD/JPY Daily Chart Triple Bottom reversal chart pattern
FOREX DOUBLE TOP CHART PARTTERN!
Double Top formations are reversal patterns and often seen to be among the most common (together with double bottom formations) patterns for currency trading. Double Tops are identified by two consecutive peaks of similar (or almost) height with a moderate pull back in between (neckline).
The double top can be a major reversal pattern (if found on a daily chart or bigger timeframe) that can be formed after an extended uptrend. This pattern is confirmed when the currency pair price breaks from (it's second peak) above through the neckline, the most likely price direction is now DOWN.
What does a Double Top Formation look like?
A double top formation is a distinct chart pattern characterized by a rally to a new high (peak1 or resistance1) followed by a moderate pull back (10 -20%) to the neckline (support level) and a second rally to test a new high ( peak2 or resistance2) again.
The two peaks (highs or resistance levels) are at approximately the same price level. What follows is a pull back to below the neck line (support).
How to trade this pattern?
Go short below the Neck Line (support level) when the currency pair price breaks from (it's second peak) above, the most likely price direction is now DOWN. Place your stop couple of pips above the second peak price!
Your target must be at least twice the distance from it's second peak break to the neckline.
Example: If the second peak is at 1.2500 and the neckline is at 1.2425, your target level must be at least 150 pips when trading the break out!
Chart example
GBP/USD 1 Hour Double Top reversal chart pattern
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The Head and Shoulders Top marks a "reversal" pattern in an uptrend market and is extremely popular among currency traders.
The pattern consists of 2 Shoulders, 1 Head and the Neckline (support):
1) The first point - the left shoulder - occurs as the price of the currency pair in a rising market hits a high and then fall back to the neckline.
2) The second point - the head - happens when prices rise to an even higher high and then fall back again to the neckline.
3) The third point - the right shoulder - occurs when prices rise again but don't hit the high of the head.
4) A key element of the pattern is the neckline and can be horizontal, slope up or slope down and is formed by drawing a line connecting two low price points of the formation.
What does a Head & Shoulders Top reversal pattern look like?
The pattern is complete when support provided by the neckline is "broken." This occurs when the price of the currency pair, falling from the high point of the right shoulder, moves BELOW the neckline.
Currency analysts will often say that the Head & Shoulders top pattern is not confirmed until the currency price closes below the support neckline - it is not enough for it to trade below the support neckline.
Please note: The Head & Shoulders Top looks similar to a but reverse.
How to trade this pattern?
Go short when the currency price CLOSES below the neckline and put a stop-loss few pips above the last peak (right shoulder).
Use a risk reward ratio 1.5 or better to calculate your profit target.(if you risk 50 pips, your target should be at least 75 pips).
Chart example
EUR/USD 1 Hour Head & Shoulders Top reversal pattern
Please note that the Head and Shoulders Top formation does not need to be perfectly symmetrical.
TRIPLE BOTTOM CHART PATTERN
Triple Bottom formations are reversal patterns with bullish bias, this pattern is not often seen in the forex market (also note Triple Tops, Double Bottoms and Double Tops). Triple Bottoms are identified by three consecutive lows of similar (or almost) height with 2 moderate pull backs up in between (neckline peaks).
The triple bottom can be a major reversal pattern (if found on a daily chart or bigger timeframe) that can be formed after an extended downtrend. This pattern is confirmed when the currency pair price breaks from (it's third bottom) below through the neckline, the most likely price direction is now UP.
What does a Triple Bottom formation look like?
A triple bottom formation is a distinct chart pattern characterized by a rally to a new low (bottom1 or support1) followed by a moderate pull back up (10 -20%) to the neckline (resistance level), a second rally to test a new low ( bottom2 or support2) followed by a moderate pull back up(10 -20%) to the neckline (resistance level) and finally a third rally to test a new low ( bottom3 or support3).
The three lows (bottoms or support levels) are at approximately the same price level. What follows is a pull back up to above the neck line (resistance).
How to trade this pattern?
Go long above the Neck Line (resistance level) when the currency pair price breaks from (it's third bottom) below, the most likely price direction is now UP. Place your stop couple of pips below it's third bottom price!
Your target must be at least twice the distance from it's third bottom break to the neckline.
Example: If the third bottom price is at 1.2300 and the neckline is at 1.2400, your target level must be at least 200 pips when trading the break out!
Chart example
USD/JPY Daily Chart Triple Bottom reversal chart pattern
FOREX DOUBLE TOP CHART PARTTERN!
Double Top formations are reversal patterns and often seen to be among the most common (together with double bottom formations) patterns for currency trading. Double Tops are identified by two consecutive peaks of similar (or almost) height with a moderate pull back in between (neckline).
The double top can be a major reversal pattern (if found on a daily chart or bigger timeframe) that can be formed after an extended uptrend. This pattern is confirmed when the currency pair price breaks from (it's second peak) above through the neckline, the most likely price direction is now DOWN.
What does a Double Top Formation look like?
A double top formation is a distinct chart pattern characterized by a rally to a new high (peak1 or resistance1) followed by a moderate pull back (10 -20%) to the neckline (support level) and a second rally to test a new high ( peak2 or resistance2) again.
The two peaks (highs or resistance levels) are at approximately the same price level. What follows is a pull back to below the neck line (support).
How to trade this pattern?
Go short below the Neck Line (support level) when the currency pair price breaks from (it's second peak) above, the most likely price direction is now DOWN. Place your stop couple of pips above the second peak price!
Your target must be at least twice the distance from it's second peak break to the neckline.
Example: If the second peak is at 1.2500 and the neckline is at 1.2425, your target level must be at least 150 pips when trading the break out!
Chart example
GBP/USD 1 Hour Double Top reversal chart pattern
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