Summary of Chart Formations

Chart formations are like bazookas because they often create huge explosions on the chart.

Triangles

Symmetrical triangles

• Consist of lower highs and higher lows
• Place entry orders above the lower highs and below the higher lows

Ascending triangles

• Consist of higher lows and a resistance line
• It usually means that the price will break the resistance line and go higher but you should place entry orders on both sides just in case the resistance line is too strong.
• Place your entry orders above the resistance line and below the higher lows.

Descending triangles

• Consist of lower highs and a support line
• Usually mean that the price will break the support line and go lower but you should place entry orders on both sides just in case the support line is too strong.
• Place your entry orders above the lower highs and below the support line.

Trend Reversal formations

Double Top

• Happens after an extended uptrend.
• Formed by 2 peaks that can’t break a certain level. This level becomes a resistance line.
• Place our short entry order below the low point of the valley in between the 2 peaks.

Double Bottom

• Happens after an extended downtrend.
• Formed by 2 valleys that can’t break a certain level. This level becomes a support line.
• Place our long entry order above the high point of the peak in between the 2 valleys.

Head and Shoulders

• Happens after an extended uptrend.
• Formed by a peak, followed by a higher peak, and then another lower peak. A neckline is formed by connecting the low points of the two troughs or “valleys”.
• Place your short entry order below the neckline.
• We calculate our target by measuring the distance between the high point of the head and the neckline. This is the approximate distance that the price will move after it breaks the neckline.

Reverse Head and Shoulders

• Happens after an extended downtrend.
• Formed by a valley, followed by a lower valley, and then another higher valley. A neckline is formed by connecting the high points of the 2 peaks.
• Place your long entry order above the neckline.
• We calculate our target by measuring the distance between the low point of the head and the neckline. This is the approximate distance that the price will move after it breaks the neckline.

Forex Training Class Lessons in 7th Grade: Important Chart Patterns

1. Pattern Schmatterns
2. Symmetrical Triangles
3. Ascending Triangles
4. Descending Triangles
5. Double Top
6. Double Bottom
7. Head and Shoulders
8. Reverse Head and Shoulders
9. Summary of Chart Formations

« Previous Next »