Ok people
So far i looked around this website and a lot of things are covered for newbies.
Except this
CHART RECOGNITION
The problem with this is that people tend to see the answer after it has occured.
As time goes along i will try and post and hopefully others POSSIBLE CHART PATTERNS.
I will start it off as an example of a past chart pattern so people understand but the goal is to post before it occurs.
Now what are we talking about.
We are looking for
Double Top (Reversal)
Double Bottom (Reversal)
Head and Shoulders Top (Reversal)
Head and Shoulders Bottom (Reversal)
Falling Wedge (Reversal)
Rising Wedge (Reversal)
Rounding Bottom (Reversal)
Triple Top (Reversal)
Triple Bottom (Reversal)
Bump and Run Reversal (Reversal)
Flag, Pennant (Continuation)
Symmetrical Triangle (Continuation)
Ascending Triangle (Continuation)
Descending Triangle (Continuation)
Rectangle (Continuation)
Price Channel (Continuation)
Measured Move - Bullish (Continuation)
Measured Move - Bearish (Continuation)
Cup with Handle (Continuation)
Attached is a example of a double top numbers 1, 2
and a double bottom numbers 3 , 4
NOW THE QUESTION IS
WHY DID THE DOUBLE BOTTOM FAIL AND THAT IS WHERE TO TO GO SHORT (SELL) ON YOUR TRADES ?
ANSWER
If you look at the two arrows you will see a confirmation in VOLUME.
The arrow on top is pointing to the candle and the arrow on bottom
is pointing to the severe overbought volume in RSI which caused a break in the double bottom.
VOLUME can be a confirmation in a break in chart patterns MOST of the time
but not always. BUT MOST of the time.
Divergence can also be a another confirmation but thats another example.
In case anyone didnt know rsi
above 70 and below 30 is severe oversold and overbought in volume.
I would sell below the 10/6 black trendline with a stop above the red trendline.
You could also do a vice versa trade with a buy above the red with a stop below the black but the usd/cad had a long trend up. I think it more dangerous.
Hello, chart recognition is important but everyone has a different perspective of how to read a chart based on the information they have already learned, so it might be easy for you to say that, but you need to make sure the other newbies understand your explanation.
Hi,
I really like chart patterns and try to watch for them as much as possible. I agree that there’s not many threads discussing them for some reason.
Here’s a few pics I took a week ago or so, showing symmetrical triangles in a 5 min timeframe. They can appear on any timeframe. Symmetrical triangles are a continuation pattern of a prior trend. However sometimes they seem to form within a range so it’s hard to tell what the prior trend is. In this case I just go with a break of either upper or lower trend line. I don’t use the volume indicator because the volume in Forex is listed as tick volume not actual order flow. So, it can be misleading.
As you can see in the pics below, just prior to the pink trend lines outlining the equally narrowing price range, the price was going down. Therefore we would look for a break of the lower trend line. These pics shows this was the case on three different pairs happening at the same time. Cool eh!
