Chart Pattern Analysis Methods On Forex – In the world of trading, to obtain optimal profits, of course, a lot of data and analysis is needed to set positions in forex trading.
One that is very meaningful in forex trading is the universal technical analysis method and is often used by traders in the world. One of these technical analysis methods is the chart pattern.
The chart pattern analysis method is a type of analysis method that has a fairly large accuracy ability, where by reading the chart pattern can share buying and selling signals to ensure decisions.
Therefore, it is very important to master the chart pattern because technical analysis is very meaningful in carrying out trading, from professional traders to newcomer traders.
Well, to pursue the analysis method, let’s discuss more deeply overwriting the chart pattern analysis method from the interpretation, types and examples in this basic post.
What is Chart Pattern Analysis Technique on Forex
Chart Pattern is a combination of price points in a period that wants to form a pattern, where the pattern is pronounced by the name Chart Pattern.
In the world of investment and trading the pattern will later want to share signals to the price movement of a relic, such as:
- Continuation
- Reverse
- Bilateral
Continuation is a continuous price movement, reverse is a rotating price movement and vice versa for bilateral is a rotating but continuous price movement.
All of the above trends are not always negative or positive, because the trader’s job is to analyze and recognize the pattern, where the pattern can be a positive or negative charge for themselves and can make decisions based on the results of the analysis and identification.
Types of Chart Patterns on Forex
As explained earlier, there are some types of chart patterns that need to be observed in the use of chart patterns in trading, such as:
1. Continuation Chart Pattern
In the technical analysis of chart patterns there is a type of chart pattern called continuation, where this chart pattern is the trend movement of a relic price that will continue whether there are obstacles or not in a state of rising or falling prices.
There are some patterns that often arise or are universal in continuation chart patterns, including the following:
- Pennant
A pennant pattern is a pattern that will be established when the resistance line and the support line point in the same direction and have a pointed end. In other words, if the resistance line displays a shrinking movement, the support line displays an increasing price movement and vice versa.
Generally, the sales volume of a relic shrinks when this form of chart is created and will rise again when the price rises and a breakout occurs.
- Flag
In its own meaning, flag means flag in Indonesian, therefore, this pattern proves the form of a pattern that resembles a flag when mixed. The pattern comes from resistance lines and support lines that move in the same direction.
This pattern can be a signal indicating that there will be a price increase, decrease or even sideways.
But usually if the flag pattern has a form created from a line that slopes to the right of the base to the estimated relic price will face a bullish continuation pattern otherwise if the line created from a line that slopes to the right of the top will indicate a bearish continuation pattern.
- Wedges
The wedges pattern on the chart pattern is the same pattern as the previous 2 patterns that have the direction of the resistance and support lines in the same direction. However, in this wedges pattern, the support line is more slanted compared to the resistance line.
- Cup and Handle Pattern
It could be that in the name alone we can already predict what the cup and handle pattern will look like. It is true that the pattern created from the cup and handle patter has the shape of a cup complete with handles. However, this pattern is not often intertwined because it has a manufacturing process that can take from 7 to 64 weeks.
2. Reversal Chart Pattern
Reversal Chart Pattern is the opposite of continuation pattern where this pattern is a pattern of a relic price chart that proves the price movement is about to rotate from down to up or the reverse.
There are several types of reversal chart patterns, including the following:
- Head and Shoulder
As mentioned earlier, head and shoulder is part of the reversal chart pattern which can be established when the price is facing an uptrend or downtrend. But there are some phases for the creation of this pattern, which are as follows:
- Shoulder, which starts with the price reaching the initial large point.
- Head, which is about to form a price larger than the shoulder.
- After that, the price can go up or down in an extreme way (depending on the situation).
- Then the price is about to end at the head point.
- At the peak phase the price is about to drop again at the shoulder point.
- Double Top/ Double Bottom
Double top and double bottom are reversal price movements that will be established when the price relics breakout the resistance line called top or support line called bottom twice where the pattern will form the letters Meter or W.
3. Bilateral Chart Pattern
The last is a bilateral chart pattern where the resistance and support lines in this pattern move in the same direction, but one of the two lines is either flat or normal. Therefore, this pattern proves trend continuation and reversal at the same time.
One of the pattern forms listed in the bilateral chart pattern type is the triangle pattern which is broken down into parts, namely, ascending triangle, descending triangle and symmetric triangle.
Tips for Using Chart Pattern Analysis Techniques in Forex Trading
After you understand what the chart pattern analysis method is from the interpretation and types, there are some guidelines that you can use in using the chart pattern analysis method, including the following:
1. Using Chart Alteration
The initial guide that you can use is the method of using chart alterations. The chart alteration has generally been widely provided in trading applications, so you don’t need any trouble getting the data.
In the use of these chart alterations, there must be different and unique uses and data, therefore you can use these charts as bonus data outside the chart pattern itself.
2. Using Other Technical Markers
To get an accurate signal, of course, another push is needed, one of which uses technical markers that can confirm the chart pattern analysis that you use.
The matter is thought to be meaningful because using chart patter charts alone is generally not enough to confirm signals to ensure prices or trends are going up or down let alone sideways.
Generally, these technical markers have been provided by brokers with the application, so you just use the feature, but you must first understand the concept of the technical marker you want to use.
Cover
Such is the data overwriting the chart pattern analysis method from the interpretation, types, examples and tips that have been presented in the above post.
It is necessary to remember to master each bottom of trading from the use of technical and fundamental analysis and others as well as to get the maximum profit possible and become a professional trader.
Hopefully this data is useful and can expand your knowledge in the world of investment, especially the world of forex trading.