The Chart Patterns Every Forex Trader Should Know

  In trading, chart patterns form an integral aspect that informs any technical analysis a trader may need. All traders need to familiarize themselves with the top chart patterns before they start using them while trading. To get you started, we’ll review the top chart patterns used by traders. 

What is a chart pattern?

Even before analyzing the best chart patterns that should be used for trading, it is important to know what chart patterns are. A chart pattern is basically a visual graph that shows the characteristics of prices based on their previous behavior. 

They form the basis of technical analysis as they are used by traders to predict the price of a security. 

3 main groups of chart patterns

Chart patterns have been grouped into three main groups for easier understanding i.e. reversal, continuation, and bilateral chart patterns. We’ll explore each category and look at the examples of top chart patterns every trader should know. 

Reversal 

These are signals that indicate an impending turnaround in price. Therefore, it shows when the price is about to change from the ongoing trend. For example, if you see a reversal chart pattern when there is an uptrend, you should know that the price will reverse and go down; and vice versa for a downtrend where the prices will move up. 

Continuation 

This chart form simply implies that the ongoing trend will still continue in the market. Therefore, it is an indicator for traders to carry on with the trend. 

Bilateral 

These chart formations are used when the financial markets are extremely volatile. They indicate that the prices could move either way. 

What are the top chart patterns that you should know?

Here are some examples of chart patterns that are often used in trading. 

1. Head and shoulders: this chart pattern has two peaks at both sides i.e. large and a relatively smaller peak. Traders use the peaks as heads and shoulders patterns and help to predict whether there will be a bullish-to-bearish reversal. 
2. Double top: it is used by traders to indicate trend reversal where a price is expected to hit a peak before going down to its support level.
3. Double bottom indicates that a price is set to fall below its support level. 
4. Cup and handle: this is a bullish continuation pattern.
5. Wedges: charts showing a tightened movement between sloping trend lines. 

TradingView: a helping hand

If you don’t understand chart patterns, you can use TradingView, which analyses and customizes the trading charts for you. It makes your trading experience easier and more profitable. 

Trading platform easyMarkets is the latest addition to TradingView’s integrated brokers. Clients of easyMarkets can now access the TradingView platform and get informed about the latest chart patterns. easyMarkets and TradingView have a seamless integration that makes it easier for account holders of this long-running broker to enjoy analyzed chart patterns. 

Therefore, you do not have to worry about understanding all the three main groups of chart patterns as you can find them analyzed for you at TradingView in your easyMarkets account.