Patterns Indicators FX
There are many different patterns that can be used to indicate when a currency is likely to reverse direction. These patterns can be found on charts of all timeframes, from intraday charts to weekly and monthly charts. Some of the most popular patterns include head and shoulders, double tops and bottoms, triangles, and flag and pennant patterns.
Head and shoulders patterns are one of the most well-known reversal patterns and usually form after an extended uptrend. The pattern is made up of three distinct peaks, with the middle peak being the highest (the head) and the two outside peaks being lower (the shoulders). A break below the neckline (the line connecting the lows of the two outside peaks) signals a potential reversal.
Double top and bottom patterns are another popular reversal pattern and can occur after either an uptrend or a downtrend. As their name suggests, these patterns consist of two consecutive peaks or troughs that are roughly equal in height. A break below the support line (in a double top) or above the resistance line (in a double bottom) signals a potential reversal.
Triangles are continuation patterns that can occur in both uptrends and downtrends. There are several different types of triangles, but they all have one common trait: as the price converges towards the apex of the triangle, it forms lower highs and higher lows, creating a downward-sloping trendline (in an uptrend) or an upward-