Forex Trading Patterns
This guide provides a detailed explanation of the most common Forex trading
patterns, including chart illustrations and usage tips.
1. Head and Shoulders
A reversal pattern that signals a change in trend direction. It has three peaks: a central high peak
(head) and two lower peaks (shoulders). Traders look for a breakout below the neckline for a sell
signal.
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2. Inverse Head and Shoulders
Opposite of head and shoulders. Indicates a potential reversal to an uptrend. Buy signal is
generated after a breakout above the neckline.
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3. Double Top
Occurs at the end of an uptrend. It consists of two peaks at the same level. A break below the
neckline gives a sell signal.
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4. Double Bottom
Found at the end of a downtrend. Shows two troughs at the same level. A break above the neckline
is a buy signal.
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5. Symmetrical Triangle
Indicates consolidation. Price converges into a tighter range forming a triangle. Breakout direction
determines trend continuation.
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6. Ascending Triangle
Bullish pattern. Flat top and rising bottom trend line. Breakout above resistance gives buy signal.
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7. Descending Triangle
Bearish pattern. Flat bottom with a falling upper trend line. Breakout below support line gives sell
signal.
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8. Falling Wedge
Bullish reversal pattern. Downward sloping wedge with price narrowing. Breakout upwards indicates
a buying opportunity.
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9. Rising Wedge
Bearish reversal pattern. Upward sloping wedge with narrowing price range. Breakout downward
gives sell signal.
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10. Flags
Short-term continuation patterns after a strong move. Consolidation is within parallel lines. Breakout
in trend direction continues the move.
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11. Pennants
Similar to flags but with converging trend lines. Short consolidation followed by a breakout.
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12. Cup and Handle
Bullish pattern resembling a tea cup. After the handle forms, breakout above resistance gives buy
signal.
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13. Rectangle
Consolidation zone between horizontal support and resistance. Breakout gives trend direction
signal.
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14. Triple Top
Bearish reversal pattern with three peaks at resistance level. Breakout below support gives sell
signal.
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15. Triple Bottom
Bullish reversal pattern with three troughs at support level. Breakout above resistance gives buy
signal.
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Notes
Notes
