3 Best Chart Patterns for Intraday Trading in Forex

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There are three types of chart pattern figures in Forex based on their potential: The indicator is developed for automatic drawing of Fibonacci levels on the chart. It will also Alert you if the price is in a Safe or Dangerous zone to trade and show you the distance to the next level.


Each indicator added to the chart creates its own horizontal line - that way each line has its own settings: name, chart, style, width, signals and is processed by the indicator that called it. The newly created lines are initially inactive, they are activated after the user moves and places them.

Exchange rates fluctuate continuously due to the ever changing market forces of supply and demand. Forex traders buy a currency pair if they think the exchange rate will rise and sell it if they think the opposite will happen. The Forex market remains open around the world for 24 hours a day with the exception of weekends. Before the Internet revolution only large players such as international banks, hedge funds and extremely wealthy individuals could participate.

Now retail traders can buy, sell and speculate on currencies from the comfort of their homes with a mouse click through online brokerage accounts. There are many tradable currency pairs and an average online broker has about One of our most popular chats is the Forex chat where traders talk in real-time about where the market is going. Stochastic 89, 5, 3 is approaching its support at 4.

Stochastic 55, 5, 3 is approaching its support at 7. Stochastic 89, 5, 3 is approaching its support at 3. From a technical point of view, a resistance breakout should trigger some rallies on intraday charts, let's see Thank you for support and trade with care!

Stochastic 55,5,3 is also approaching support where we might see a On daily chart the trend is still bullish, and from a technical point of view, the pair could complete ABC structure around Ichimoku cloud is also showing signs of bearish pressure in line with Continuation chart patterns are the ones that are expected to continue the current price trend, causing a fresh new impulse in the same direction. If you have a bullish trend, and the price action creates a continuation chart pattern, there is a big chance that the bullish trend will continue.

This chart pattern cheat sheet shows six of the most common continuation chart patterns in Forex trading. Each of these six formations has the potential to activate a new impulse in the direction of the previous trend. Reversal patterns are opposite to continuation patterns. If you have a bullish trend and the price action creates a trend reversal chart pattern, there is a big chance that the previous bullish trend will be reversed.

This is likely to cause a fresh bearish move on the chart. Notice that the Rising and the Falling Wedge could act as reversal and continuation patterns in different situations. This depends on the previous trend. Just remember that the Rising Wedge has bearish potential and the Falling Wedge has bullish potential, no matter what the previous trend is. See below for the opportunity to watch a free video that shows a real trading example with the Double Bottom Chart Pattern.

The video shows a bullish trade taken as a result of a breakout through the trigger line of the pattern. The neutral chart patterns are the ones that induce a price move, but the direction is unknown. The Forex pair is trending in the bullish direction.

Suddenly, a neutral chart pattern appears on the chart. What would you do in this case? You should wait to see in which direction the pattern will break. This will give you a hint about the potential of the pattern. These are the most common neutral chart patterns that have the potential to push the price in either the bullish or the bearish direction. Now you have 20 different chart pattern examples. But which are the best chart patterns to trade?

Now that I have given you a brief visual guide to chart patterns, I will tell you which three of these are the best chart patterns for intraday trading. Then I will give you a detailed explanation about the structure and the respective rules of each one of the best chart patterns. The Flag and the Pennant are two separate chart patterns that have price continuation functions. However, I like to treat these as one as they have a similar structure and work in exactly the same way.

The Flag chart pattern has a continuation potential on the Forex chart. The bull Flag pattern starts with a bullish trend called a Flag Pole, which suddenly turns into a correction inside a bearish or a horizontal channel. Then if the price breaks the upper level of the channel, we confirm the authenticity of the Flag pattern, and we have sufficient reason to believe that the price will start a new bullish impulse.

For this reason, you can buy the Forex pair on the assumption that the price is about to increase. Place your Stop Loss order below the lowest point of the Flag. The Flag pattern has two targets on the chart. The two pink arrows show the size of the Flag and the Flag Pole, applied starting from the moment of the Flag breakout.

The Stop Loss order of this trade stays below the lowest point of the Flag as shown on the image. The Pennant chart pattern has almost the same structure as the Flag. A bullish Pennant will start with a bullish price move the Pennant Pole , which will gradually turn into a consolidation with a triangular structure the Pennant. Notice that the consolidation is likely to have ascending bottoms and descending tops.

If the price breaks the upper level of the Pennant, you can pursue two targets the same way as with the Flag. The first target equals the size of the Pennant and the second target equals the size of the Pole. The image gives an example of a bull Pennant chart pattern. As you see, Flags and Pennants technical analysis works exactly the same way. The only difference is that the bottoms of the Pennant pattern are ascending, while the Flag creates descending bottoms that develop in a symmetrical way compared to the tops.

This is the reason why I put the Flag and Pennant chart patterns indicator under the same heading. The Double Top is a reversal chart pattern that comes as a consolidation after a bullish trend, creates couple tops approximately in the same resistance area and starts a fresh bearish move.

Conversely, the Double Bottom is a reversal chart pattern that comes after a bearish trend, creates couple bottoms in the same support area, and starts a fresh bullish move. We will discuss the bullish version of the pattern, the Double Top chart pattern, to approach the figure closely. To enter a Double Top trade, you would need to see the price breaking through the level of the bottom that is located between the two tops of the pattern.

When the price breaks the bottom between the two tops, you can short the Forex pair, pursuing a minimum price move equal to the vertical size of the pattern measured starting from the level of the two tops to the bottom between the two tops. The pink lines and the two arrows on the chart measure and apply the size of the pattern starting from the moment of the breakout.

In our case, I use a small top after the creation of the second big top to position the Stop Loss order. Notice that the Double Bottom chart pattern works exactly the same way but in the opposite direction. The Head and Shoulders is another famous reversal pattern in Forex trading. It comes as a consolidation after a bullish trend creating three tops.

The first and the third tops are approximately at the same level. However, the second top is higher and stays as a Head between two Shoulders. This is where the name of the pattern comes from. The Head of the pattern has a couple bottoms from both of its sides.