How to trade Forex Chart Patterns|Chart Pattern Trading Strategy Step-by-Step Guide –Forex Trading Strategy| Symmetrical Triangle|Ascending/ Descending Triangle|Rectangle
Neutral patterns:
1. Symmetrical Triangle
2. Ascending/ Descending Triangle
3. Rectangle
Rectangle
A Neutral rectangle is a range from a meandering market.
Price will drift sideways find itself a high and a low range where it gets stuck..
A Rectangle is price action that you can sandwich between two horizontal lines, support and resistance levels. A neutral Rectangle can occur in the off-sessions or in a market that is preparing itself for upcoming news or some kind of event.
A Rectangle can be very narrow as in a consolidated market, or a little wider where there is actual price movement inside of it. This is the classic formation for a “breakout” type of trade. The breakout can occur when a new market session becomes active, like the London session. It can also breakout as a result of the news release the market participants were waiting for.
The breakout of a Neutral Rectangle can easily be in either direction, so we will prepare ourselves for either a buy trade or a sell trade.
Ascending / Descending Triangles
This is a pattern that is favored as a continuation pattern, but over the years it have found that there is no edge to this pattern in regards to its ability to keep the market moving.
In a Descending Triangle, price will drop in a bear trend and then take a breather. This resting phase will have price narrowing, but the lows it makes in the formation will be roughly the same while the highs will be getting progressively lower and lower. From here, the market can break out in either direction. The flat bottom and falling highs suggest that the bears have a bigger impact than the bulls, but it's relation to the wedge formation sees the market simply bottoming out and ready for a reversal.
The opposite is true for an Ascending Triangle. The formation comes off a rising market and then starts to form a series of equally high highs, but the lows, however, are progressively higher. This can be both a resting period before the market continues, or a topping out of the price followed by a reversal.
Symmetrical Triangle
This is a patterns that is very similar to a Pennant. The only difference is that the Symmetrical Triangle does not have a pole leading into the formation.
The absence of a pole changes the probability of this being a continuation pattern to a neutral pattern. The price can come from above the pattern or from below the pattern, and even sat times from the side of the pattern. Generally , the market either wanders in the Symmetrical Triangle form above or from below, but it does it with very little conviction. The market will meander into it, but once it does, the range it forms will narrow.
The breakout of the Symmetrical Triangle can occur in either direction. Once it does breakout, it has a good potential to move at least as far as the widest section of the formation.
Neutral patterns:
1. Symmetrical Triangle
2. Ascending/ Descending Triangle
3. Rectangle
Rectangle
A Neutral rectangle is a range from a meandering market.
Price will drift sideways find itself a high and a low range where it gets stuck..
A Rectangle is price action that you can sandwich between two horizontal lines, support and resistance levels. A neutral Rectangle can occur in the off-sessions or in a market that is preparing itself for upcoming news or some kind of event.
A Rectangle can be very narrow as in a consolidated market, or a little wider where there is actual price movement inside of it. This is the classic formation for a “breakout” type of trade. The breakout can occur when a new market session becomes active, like the London session. It can also breakout as a result of the news release the market participants were waiting for.
The breakout of a Neutral Rectangle can easily be in either direction, so we will prepare ourselves for either a buy trade or a sell trade.
This is a pattern that is favored as a continuation pattern, but over the years it have found that there is no edge to this pattern in regards to its ability to keep the market moving.
In a Descending Triangle, price will drop in a bear trend and then take a breather. This resting phase will have price narrowing, but the lows it makes in the formation will be roughly the same while the highs will be getting progressively lower and lower. From here, the market can break out in either direction. The flat bottom and falling highs suggest that the bears have a bigger impact than the bulls, but it's relation to the wedge formation sees the market simply bottoming out and ready for a reversal.
The opposite is true for an Ascending Triangle. The formation comes off a rising market and then starts to form a series of equally high highs, but the lows, however, are progressively higher. This can be both a resting period before the market continues, or a topping out of the price followed by a reversal.
Symmetrical Triangle
This is a patterns that is very similar to a Pennant. The only difference is that the Symmetrical Triangle does not have a pole leading into the formation.
The absence of a pole changes the probability of this being a continuation pattern to a neutral pattern. The price can come from above the pattern or from below the pattern, and even sat times from the side of the pattern. Generally , the market either wanders in the Symmetrical Triangle form above or from below, but it does it with very little conviction. The market will meander into it, but once it does, the range it forms will narrow.
The breakout of the Symmetrical Triangle can occur in either direction. Once it does breakout, it has a good potential to move at least as far as the widest section of the formation.
0 comments:
Post a Comment