Always determine whether the market is in Trend Mode or consolidating. Recommend the chart patterns which are the most effective for a particular situation. A well positioned price position can create confluence of our Chart Pattern Trading Strategy. The faster you trade the most profitable charts – the easier it will become to spot them in time in real-time. Get ready to trade chart patterns.

There are many forex strategies that work. But the problem is which one of them you can take as your own trading strategy and make yourself use this. If you want to take help from us to solve this problem? We can suggest adopting a strategy as your own strategy, which is the “chart pattern”. It is a manual, classic, very proven high probabilities forex trading strategy. Read ahead know about this-

What Is Chart Pattern for Forex

The chart pattern is a technical analyzing tool. It’s a graphical formation in a price chart, which is created by price movement or price action. Naturally its forms in the market’s price chart as pre-designed and pre-identified price patterns. It has been repeating in the market’s chart again and again. And it is giving future price movement guesses. The trader predicts the future price movement by this chart pattern. The chart pattern always gives two types of price movement direction- market’s price reversal and market continuation. The well-known reversal chart pattern name is –Double top, Double bottom, Head and shoulders, Inverted head & shoulders, Triple top, Triple bottom, Rising wedge, falling wedge, etc. And most common continuation chart patterns are-The flag pattern, the pennant, Ascending triangle, Descending triangle, symmetrical triangle, rectangle, etc.

How to trade with the chart pattern strategy? Now we are giving a few chart patterns trading descriptions-

Double Top Chart Pattern Trading Strategy

The double top chart pattern strategies use simple and sound trading principles. If used properly it could change your market results dramatically. It’s an amazing method to basically trade any market in general. Is it possible to use it according to your chosen time interval or whatever trading style it is employed by. Despite this 90% of Forex trading users lose money due to false teachings and unwise trading strategy. We will outline five general trading rules to capture these markets. Also read How Currency Pairing Works in Forex: How Currency Pairing works in Forex. Read our article on chart pattern trading strategy strategy: chart patterns and price actions.

The double top chart pattern strategy is a bearish reversal pattern. It gives the signal of a sell trade entry. It’s a trend reversal pattern. After a good uptrend, the double top pattern makes the uptrend reverse to the downward direction. It occurs at the high label or end label in an uptrend.

For the definition of the double top, we can say- the double top chart pattern always appears at the heist label within a perfect uptrend, twice price tops, peaks or swing high stay side by side, some gap or distance has between two tops. After compilation the first top price retraces back a little bit and makes a supporting label which calls neckline, then the price again goes up and creates the second top which does not extend over the first top. It looks like an” M’ shape.

For a Valid or Perfect Double Top Some Conditions Are Necessary-

• A strong uptrend or a perfect uptrend must happen for a double top. The longer the uptrend it’s the better for a double top.
• At the heist label of an uptrend, there are two price peaks or top must have to occur.
• Two tops or swing high stand side by side. But it must have remained a distance or gap between two tops. The more distance between two tops is the better double top.
• At the basement or bottom label of two tops, there must have to be a supporting label with several swing lows which is called a “neckline” in a double top. The more the depth of the neckline label from the high label of a double top, is the better the double top pattern.
• The price of the second top of a double top must not exceed the first top’s price. The lower the second’s top price than the first top’s price is best for a double top pattern.

How can I trade with the double top pattern? To better understand this, see the  

Picture below of a double top

In that picture, you first identify a double top which fully fills the conditions that we have mentioned previously. After being sure it is a double top, then you have to mark its neckline area very properly. Which acts as a supporting label also. We suggest marking this neckline or support label with a horizontal line for better action. And the neckline of the double top needs to be completely breakthrough for sale preparation. The neckline breaking candle must be closed in the full out area of the neckline or as it’s a support label’s area.

It just breaks through the neckline of the double top so you should not get a sell entry. You must wait for neckline breakout confirmation. How can you get satisfaction about neckline breakout confirmation? You observe more candles close in and out of the neckline label. Getting full satisfaction about double top neckline breaks, you can take a sale entry. But you need a bearish candlestick sell signal to take a sell entry.

Typically, set the double top’s profit target (tp) as per the total length of the double top’s high to neckline area. But you can also set the tp on the next support label. And you set the stop loss (SL) above the neckline support area.

Double bottom chart pattern trading strategy

The double bottom pattern is fully opposite the bias of the double top. It is a bullish trend reversal pattern. It occurs in the bottom label or heists the lower end of a downtrend. It makes the downtrend reverse to the upward direction. It gives a signal for a buy trade entry.

Double bottom consistency with two bottom lows or swing lows at the lower end after a strong downtrend. Two bottom lows appear side by side, with some gaps or distances between

twice bottoms. After creating the first bottom price, bounce back a little bit to upward and make the resistance label which calls the neckline, then again the price falls down and completes the second bottom. The double bottom pattern looks like a “W” shape.

See the picture below-

In the picture, there is a strong downtrend, the end of the trend double bottom pattern has occurred, there is a suitable distance between two bottoms, the price of the second bottom not exit lower than the first bottom, a neckline has created resistance on the upper label of a double bottom. It is a valid or perfect double bottom pattern’s example.

The double bottom chart pattern trading system as a same double top pattern. After completely breaking the neckline you have to get a buy trade entry with a double bottom pattern. But remember this, always be over sure about neckline breakout. Don’t fall into a trap of false break.

Set the profit target (tp) as per the length of double bottom heist low price to double bottom neckline. You can also set tp to the next resistance label. Set the stop loss (sl) order some pips below the neckline or resistance label.

Conclusion       

It is no doubt; maximum times chart pattern forex strategies that work. But you have to need the capacity of visualizing it on the market price chart. And you have to need graphical skill to draw it on the chart. If you do this properly then you can get the trading benefit from this strategy. Also, don’t forget about money management with the strategy.