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Part I. Basic chart patterns

Basic chart patterns - Forex School

Commander in Pips: Hi there. So we’ve moved forward significantly and studied a lot of different tools for trading – lines, Fibonacci, candlestick patterns, indicators and others. Today we start with classical patterns.

Pipruit: So, this will be something like candlestick patterns?​

Commander in Pips: The idea is the same, but while candlestick patterns consist just with 1-3 candles or trading periods, classical patterns have no definite number of trading periods.

Pipruit: Hm, and why do they call “patterns” then? How we will identify them?​

Forwhy do they call “patterns” then? How we will identify them?​ - Forex Schoolex Military School – Basic chart patterns

Commander in Pips: Very simple – by shape. The major difference with Japanese patterns is in different way of identification. It comes rather from shape of pattern and not from relative possession of side-by-side trading periods and their close prices. These patterns call “classic”, because they were invented and found in 30-60s of 20th century. From time to time they received different additional details and nuances from different well-known traders. They are products of American technical analysis, so that’s why they call “classical” and also because they initially were based on bar charts, rather than candlesticks charts. Bar charts are only have been used in Europe and US till 50-60s. Despite the fact that these models are “classical”, they continue to work nowadays also. Although trading them today is much harder than in 50s and 60s, because these models are well-known and market makers very often use them to grab public’s stop orders. Nevertheless, you have to know them. Besides, they are really looking beautiful.

Pipruit: And what are they for?​

Commander in Pips: These patterns have the same purpose as candlesticks. They could be divided into two major groups – continuation patterns and reversal patterns. So, depending on the particular pattern it could warn you about further price action in advance. That’s simple. But currently, some patterns could be used with additional and advance ways to analyze them – you know I like it. So, I will show you the modern approach to the trading of classical pattern.

Pipruit: So, and what are these patterns?​

Commander in Pips: Their amount is not as big as candlesticks ones:

1. Double top or Double bottom;

2. Head and Shoulders (H&S) and Inverse H&S;

3. Rising and falling Wedges;

4. Bullish and Bearish Rectangles;

5. Bullish and Bearish Flags and Pennants;

6. Different types of Triangles – Symmetrical, Ascending and Descending)

That’s all.

Pipruit: I though they are fewer…​

Commander in Pips: Don’t worry. At the end of this chapter we will prepare cheat sheet table – to make your life easier.

Comments

A
amasat
12 years ago,
Registered user
Excellent

i need more time to read it all ,,,, ;)
H
Hamza Samiullah
6 years ago,
Registered user
Nice one....
O
One-fm
5 years ago,
Registered user
Good.

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