Chart patterns are a very effective tool for traders to embrace and use to their complete advantage. Chart patterns are used to inform you of signaling reversal or continuation of the current trend. They also help identify entry and exit points of a position. That’s why as a trader, informing yourself with as much knowledge and educational background as possible is the best way to make sure you're successful when trading.
One thing you will encounter daily as a trader is chart patterns. There are three main groups of chart patterns, and they're reversal patterns which are chart formations that signal that the ongoing trend is about to change directions. Continuation patterns are chart formations that signal the ongoing trend will resume directions. Also, bilateral patterns which get a bit more complicated because they signal the price can move either way. This is where something called the triangle formation comes in handy.
There are quite a few chart patterns you will come across in the Forex industry, but some of the popular ones I have listed below.
The most popular of the patterns is the candlestick pattern. The candlestick pattern is frequently used by traders across all time frames and comes in two well-known formations, the “bearish and bullish formations.” Shawn Lucas is the head trader at The Apiary Fund, and he falls victim to one of the many traders that use the candlestick patterns among all time frames and loves to encourage his up and coming traders to do the same. Another type of chart pattern you can expect to see is one I mentioned above, triangle patterns. Triangle patterns are a type of continuation pattern, indicating an ongoing trend, which will likely resume its course in the same direction. Another type of chart pattern is called the double top and double bottom which tells us a double top has two peaks indicating interest among buyers and possibilities of a downtrend. A double-bottom pattern, on the other hand, occurs after a downtrend, when price movement creates two bottoms at same level predicting a potential uptrend, due to rising buyer interest. I know this sounds very confusing, and that is why I’m so thankful to have Shawn Lucas as the head trader where I am still on my trading journey career. Don’t give up on your trading, it takes a lot of experience and guidance to remain consistent.