FXtrader
FXtrader
About us Products / Services Chart Demo Financial News YourPage Calculators Tutorial Forum
Introduction
Chart Point
Chart Pattern
Elliott Waves
Oscillators
Chart Patterns

Chart patterns are statistical results over the past. The result has given us indication where the price will likely to move after forming a certain pattern. We're going to introduce briefly some of the major chart patterns.

Trend Reversal
Head and Shoulders, it's a trend reversal pattern. Once the neckline is broken and the price should not rebound above the neckline that has become a resistant line. The target price after breaking the neckline is usually the distance from the peak of the head to the neckline and projected it from the point where the neckline is broken.

Double Tops/Bottoms, it's another trend reversal pattern. Similarly, once the neckline is broken and the price should not rebound above the neckline that has become a resistant line. The target price after breaking the neckline is usually the distance from the peak of the head to the neckline and projected it from the point where the neckline is broken.

Consolidation
It usually happens after a sharp upward or downward movement.

  • Wedge, the price usually continues with the same direction before the consolidation. Price goes up after a down wedge and goes down after an up wedge.
  • Flag, it's similar to wedge. Price usually continues with the same direction before the consolidation.
  • Diamond, it's an unusual price pattern. Breaking of any side of the diamond will go up or down to a target that has the same distance of the diagonal.
  • Triangle, it's part of the wedge except that it's symmetrical. The chances of breaking either upside or downside are almost the same.
Trend
Trend lines are the most useful indicator to measure if the price is moving in a trend or in a range. If the trend line is broken. It's the first signal that the trend might reverse. However, it can be just a retracement and the trend will resume afterward. The break out will then alter the slope of the trend from a very bullish or bearish signal to a less bullish or less bearish signal. Price moving in a channel is a healthy trend. Breaking out of the lower channel line usually see the price going down to the level that is equivalent to the width of the channel. It's similar to breaking out the upper channel line.