✅It is difficult to overestimate the importance of the classic continuation and reversal patterns. For a real trader trading on the Forex market, it is huge, because these patterns make it possible to predict the behaviour of the price.
⚠️If one of the trend continuation patterns appears in front of us on the chart, it means that the usual correction (rollback) is taking place. After its completion, it becomes possible to profitably enter the market at the existing rate.
📈📉Head & Shoulders
🟢The pattern is a reversal pattern that is usually formed during a and creates a top — the first shoulder. After the correction, the price creates a higher top — the head. After the next correction, the price creates a third top, which is below the head — the second shoulder. So, we have two shoulders and a head in the middle.
🟢Confirmation of the pattern occurs when the price breaks the line that runs through two bases on either side of the head. This line is called the neckline. When the price overcomes the neck line, we get a reversal signal.
🟢The stop loss order should be placed directly above the second top. The minimum profit target is equal to the distance between the neck and the center line that connects the two tops.
🟢It is quite difficult to see this pattern on a real chart – it looks like a standard flat, but with unstable . A diamond means, at least, medium-term market uncertainty, when the probability of movement in any direction is almost the same. But the longer it takes to form, the stronger the breakdown and the subsequent trend will be.
☕️Cup with Handle
🟢The cup with handle pattern is considered a continuation pattern, so it is necessary to determine the previous uptrend. This can be done by analyzing price dynamics or technical indicators, such as moving averages.
The cup should be more U-shaped, not V-shaped, and the upper points on both sides of the cup should be approximately at the same level.
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