Forex Chart Patterns (2024)

Trading with thechart patterns can beeasy ifyou know how todistinguish them andhow toplace theentry andexit orders correctly. There are many different chart patterns recognized bytheexpert financial traders. But, inmyopinion, inForex trading, there are five most important andrather frequently appearing patterns: ascending, descending andsymmetrical triangles, andrising andfalling wedges. Here you will find themodels ofthese patterns andtheir descriptions:

Ascending Triangle

Generally, it isabullish continuation pattern, but abreakout ineach direction ispossible. Ifyou like taking risk, you can golong immediately after you spot this pattern. But ifyou want tobecareful, it isrecommended towait until breakout appears ineither side. Themost important parts oftheascending triangle are thehorizontal line andtheupwardly sloping line. It isalso important fortheprice rate totouch each ofthose lines atleast twice before the breakout materializes. This rule isvital forall ofthefiveForex chart patterns presented inthis article. Asyou can see ontheimage, theprice has touched thesloping line three times andthehorizontal line two times, andthen broke out through thelatter. Stop-loss should beplaced slightly below thehorizontal line. Asamoderate pull-back ispossible, consider placing stop loss near 70%level ontheway from thesloping line tothehorizontal at the time ofthebreakout. Take-profit should beplaced according totheauxiliary sloping line, which runs from triangle'stop-left angle parallel tothemain sloping line. Consider placing your target attheauxiliary line'slevel at the time ofthebreakout.

Descending Triangle

A descending triangle isabearish continuation pattern, but abreakout ineach direction ispossible. Aswith theprevious pattern, you can goshort immediately after you spot it.Wait forbreakout ineither side toenter ahigh-probability trade. Themost important parts ofadescending triangle are thehorizontal line andthedownwardly sloping line. Theprice rate should touch each ofthose lines atleast twice before the breakout occurs. Astheimage shows, theprice has touched thesloping line three times andthehorizontal line two times, andthen broke out down. Stop-loss andtake-profit levels are placed using thesame principles aswith theascending triangle.

Symmetrical Triangle

Same as with two other triangles, it isacontinuation pattern that breaks out inthedirection oftheprevious trend. However, inpractice, a breakout inevery direction ispossible. Asalways, you may decide toopen aposition inthedirection oftheprevious trend immediately when you spot this triangle. Ifyou wait for thebreakout to occur, then you will have better chances forsuccess. Themost important parts ofthesymmetrical triangle are thedownwardly andupwardly sloping lines andthehorizontal line that bisects theangle created bythefirst two lines. Thelast line should bereally horizontal (some degrees oferror are OK) orotherwise it issome kind ofawedge but not asymmetrical triangle. Asalways, theprice should touch each ofthemain sloping lines atleast twice before the breakout happens. The symmetrical triangle, which isshown ontheimage, breaks out downwardly after touching thebottom line three times andthetop line multiple times. Stop-loss should beplaced near 70%level ontheway from theopposite sloping line tothehorizontal line inthebasem*nt ofthetriangle (not thebreakout point like before). Take-profit can beset near theauxiliary horizontal line, which runs from thetop orbottom base angle (depends onthebreakout direction) ofthetriangle andisparallel tothemain horizontal line.

Rising Wedge

Usually, this chart pattern signals areversal from theprevious trend, but both upward anddownward breakouts are possible. You can enter arisky trade immediately when you see this pattern. Wait foraclear breakout toenter amore probable trade. Thecrucial parts oftherising wedge are thetwo upwardly sloped lines that form awedge. Theprice should touch each ofthem atleast twice before the breakout occurs. Ontheimage below, you can see that theprice touched the top line two times andthebottom line multiple times. Thedownward breakout isshown. Stop-loss can beset attheauxiliary line that bisects theangle ofwedge; set itnear thelevel oftheauxiliary line atthe time of thebreakout. Take-profit isset near theauxiliary line (not shown ontheimage) that runs from thetop orbottom base angle (depending onthebreakout direction) ofthewedge andisparallel totheopposite sloping line. E.g., inthepicturedexample wedge, theline should start atthebottom angle ofthewedge andbeparallel tothetop sloping line. Take-profit should beplaced near thelevel ofthat auxiliary line atthe time of the breakout.

Falling Wedge

Asits rising cousin, this chart pattern often signals areversal from theprevious trend, but both upward anddownward breakouts are still possible. Toenter arisky trade, open itas soon asyou see this chart pattern. Wait foraclear breakout toenter amore probable trade. Themain parts ofthefalling wedge are two downwardly sloped lines that form awedge. Theprice should touch each ofthem atleast twice before the breakout. Ontheimage you can see that theprice touched thebottom line two times andthetop line multiple times. The upward breakout isshown. Stop-loss andtake-profit levels are set using thesame principles aswith therising wedge.