Charts record every price movement of the trading instrument. Charts reflect the traders’ sentiment in any given market scenario and depict the underlying mindset of the buyers and sellers. Traders tend to behave mostly in a similar pattern in identical situations. Since charts are a result of the actions of traders, the trading charts reflect patterns. Forex patterns and stock market patterns are similar to each other as the trader’s sentiment mostly drives these markets.
A deep understanding of these patterns provides the trader with the best entry and exit points and enables the trader to benefit from the entire trend movement. Successful traders master these forex patterns since they repeatedly occur and present multiple opportunities. The chart patterns appear in all time frames and are suitable for all kinds of traders. Both new traders and advanced traders can trade the patterns with great success.
Chart Patterns
Chart patterns are formations visually identifiable by the careful study of charts. Completing chart patterns indicates the beginning of a new move, a new leg of the price movement, or a reversal of the current trend direction. Completion of a chart pattern enables the trader to identify the best entry point in the market for swing trading as it indicates the beginning of the next big swing move.
Forex Chart Patterns
Chart patterns are classified as a continuation pattern and reversal patterns based on the patterns’ ability to reflect the underlying asset’s directional bias. The completion of continuation patterns indicates the best possibility of the prices to continue the movement in the trend direction. In contrast, the completion of a reversal pattern suggests the market’s strong tendency to reverse its current trend. Both continuation patterns and reversal patterns provide a forex trader with the best trading opportunities.
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