Forex Learning: Price means the price pattern while the pattern means. So the price pattern could mean the patterns that emerge from price movements. It adopts from the basic principles of technical analysis that says history always repeats itself. True, from time to time certain price movements form a pattern repeated.
Basically there are two types of price pattern is a reversal pattern and a continuation pattern.
reversal Pattern
a. Double Top and Double Bottom
We will begin our discussion of reversal pattern first. The first to be discussed is the double top and double bottom.
You will understand the word "top" as a "peak" and "bottom" as the "valley". Thus, "double top" means "two peaks" while the "double bottom" means "two valleys".
Patterns double top and double bottom does look like two peaks and two valleys adjacent. Both of these patterns is quite easy to spot and also has a high accuracy.
The picture above is an illustration of the double top pattern. This pattern usually appears at the end of the uptrend and have a bearish indication. Note that there are six marked points on the image. You could say that there is a potential double top pattern will be formed if the price has moved down from point (3). Remember, new potential. When the point (4) breaks, then you can say that the double top pattern has been formed, in other words: "unconfirmed". Note also that the confirmation of a double top is actually a line break "base".
If the pattern already too "confirm", then the next price movement is bearish potential. The arrow indicates a potential bearish away potential that may occur. The distance that might be pursued as far as the level of price movement is the peak to the base. So if for example the distance between the top level to the base is 100 pips, then prices will potentially decline of 100 pips as well as base penetrated.
However there are times when a pullback will occur back to the base area before the target tecapai bearish movement. Typically, potential pullback will occur when prices are already "halfway" towards this target. If if the target is 100 pips movement, then usually pullback would potentially occur when the price has dropped about 50-60 pips after the base translucent. But if the pullback is going "too far" until translucent again onto the base, then this pattern is said to have become invalid or fail (failure).
If the pattern already too "confirm", then the next price movement is bearish potential. The arrow indicates a potential bearish away potential that may occur. The distance that might be pursued as far as the level of price movement is the peak to the base. So if for example the distance between the top level to the base is 100 pips, then prices will potentially decline of 100 pips as well as base penetrated.
However there are times when a pullback will occur back to the base area before the target tecapai bearish movement. Typically, potential pullback will occur when prices are already "halfway" towards this target. If if the target is 100 pips movement, then usually pullback would potentially occur when the price has dropped about 50-60 pips after the base translucent. But if the pullback is going "too far" until translucent again onto the base, then this pattern is said to have become invalid or fail (failure).
Double bottom is simply the inverse of the double top. This pattern usually appears at the end of the downtrend and have a bullish indication. When a translucent base and this pattern is confirmed, then the price of potentially bullish, How to estimate the target of its bullish movement exactly the same as the double top, only its direction upwards. Double bottom is said to fail if the pullback happened continued until translucent back to the underside of the base.
b. Triple Top and Triple Bottom
Both of these patterns is actually not much different from the double top and double bottom. However, the triple top has three peaks and triple bottom has three valleys. How to identify the confirmation is the same, break-base line. Likewise, by estimating the target of the movement after the pattern is confirmed.
Below is an illustration of a triple top and triple bottom.
b. Triple Top and Triple Bottom
Both of these patterns is actually not much different from the double top and double bottom. However, the triple top has three peaks and triple bottom has three valleys. How to identify the confirmation is the same, break-base line. Likewise, by estimating the target of the movement after the pattern is confirmed.
Below is an illustration of a triple top and triple bottom.
From
the second picture above shows that there is a possibility of a
pullback will occur to the base of the point (7), but keep in mind that
this kind of pullback (though quite often) is not always the case. Always, if the base breaks again during the pullback.
Note: The third point of the valley or peak not have to be at exactly the same level, but the difference should also not be too significant. In other words, at first glance, the third point of the valley looks the same level. Likewise, on the pattern of double top and double bottom, level peaks and troughs do not have to match exactly.
c. Head and Shoulders and Inverse Head and Shoulders
This pattern is also a reversal pattern that is quite popular because of its accuracy is quite high. Named because it's head and shoulders pattern shape as if formed a head and shoulders. Sometimes this pattern often be "salahpersepsikan" as a triple top or triple bottom, but there are key factors that differentiate this pattern with triple top or triple bottom.
Let us consider the basic pattern head and shoulders below:
Note: The third point of the valley or peak not have to be at exactly the same level, but the difference should also not be too significant. In other words, at first glance, the third point of the valley looks the same level. Likewise, on the pattern of double top and double bottom, level peaks and troughs do not have to match exactly.
c. Head and Shoulders and Inverse Head and Shoulders
This pattern is also a reversal pattern that is quite popular because of its accuracy is quite high. Named because it's head and shoulders pattern shape as if formed a head and shoulders. Sometimes this pattern often be "salahpersepsikan" as a triple top or triple bottom, but there are key factors that differentiate this pattern with triple top or triple bottom.
Let us consider the basic pattern head and shoulders below:
If you look carefully, we see that the point (3) of this pattern is higher than point (1) and (5). In the triple top pattern, these three points are likely the same level. Point higher peak that is the head of his, while point (1) and (5) is the point of his shoulders.
Head and shoulders pattern is becoming a bearish reversal pattern if it appears at the end of an uptrend. Konfirmasinua is when the line is penetrating neckline (point-to-6). If this pattern has been confirmed, then the price will likely move down as far as the distance from the top of the head to the neckline. In the picture above, is represented by a red arrow.
Pullback too often (remember: not always) going back to the neckline area before the price moves back down to achieve the target price movement. The pattern is said to fail if the pullback occurs through to the top of the neckline.
The opposite of the head and shoulders pattern is the inverse head and shoulders pattern. This pattern is a bullish reversal pattern that usually appears at the end of a downtrend. Confirmation of exactly the same as the head and shoulders. If this pattern has been confirmed, then the price will likely move up as far as the distance from the top of the head to the neckline.
The picture below will help to explain the inverse head and shoulders pattern:
Head and shoulders pattern is becoming a bearish reversal pattern if it appears at the end of an uptrend. Konfirmasinua is when the line is penetrating neckline (point-to-6). If this pattern has been confirmed, then the price will likely move down as far as the distance from the top of the head to the neckline. In the picture above, is represented by a red arrow.
Pullback too often (remember: not always) going back to the neckline area before the price moves back down to achieve the target price movement. The pattern is said to fail if the pullback occurs through to the top of the neckline.
The opposite of the head and shoulders pattern is the inverse head and shoulders pattern. This pattern is a bullish reversal pattern that usually appears at the end of a downtrend. Confirmation of exactly the same as the head and shoulders. If this pattern has been confirmed, then the price will likely move up as far as the distance from the top of the head to the neckline.
The picture below will help to explain the inverse head and shoulders pattern:
Continuation Pattern
a. Triangle
Now, we will discuss examples continuation pattern. We start from the triangle.
From the name, you may be able to estimate the shape of this pattern. Yes, this pattern does have a shape similar to a triangle. This pattern occurs because the market is moving sideways and fight between bull and bear balanced, so that eventually the price movement chart conical and formed like a triangle.
There are three types of triangles:
- Symmetrical triangle
- Ascending triangle
- Descending triangle
We will discuss one by one starting from the symmetrical triangle.
Although the meaning is a symmetrical triangle, but in reality it is not always symmetrical shape. Symmetrical triangle is a triangle pattern that has the support line (lower line) and resistance (upper line) convergent (opposite slope to a point). To make it easier to understand, let's look at the picture below:
a. Triangle
Now, we will discuss examples continuation pattern. We start from the triangle.
From the name, you may be able to estimate the shape of this pattern. Yes, this pattern does have a shape similar to a triangle. This pattern occurs because the market is moving sideways and fight between bull and bear balanced, so that eventually the price movement chart conical and formed like a triangle.
There are three types of triangles:
- Symmetrical triangle
- Ascending triangle
- Descending triangle
We will discuss one by one starting from the symmetrical triangle.
Although the meaning is a symmetrical triangle, but in reality it is not always symmetrical shape. Symmetrical triangle is a triangle pattern that has the support line (lower line) and resistance (upper line) convergent (opposite slope to a point). To make it easier to understand, let's look at the picture below:
From the picture above you can see that the pattern is formed when the market is moving sideways after a "rally" bullish. The term is "consolidating". The above example shows a symmetrical triangle that is formed during an uptrend.
A symmetrical triangle must have at least four reversal point (reversal point) consisting of two top point and two points of the valley. The picture above shows a symmetrical triangle that has six reversal point, namely point 1, 2, 3, 4, 5 and 6. The confirmation of this pattern is the break of the upper line (upper line). When this pattern has been confirmed, the next movement is rising. How to estimate the target is to be based on the baseline of the symmetrical triangle, which is the distance from point A to 1. So, if for example, its baseline along 100 pips, then the next movement was expected to be as far as 100 pips.
Another way that can be used to estimate the target of the movement is to draw a line parallel with the lower line, where the line starts from point 1.
As another pattern, any pullback could possibly be happening. In the picture above shows a pullback occurs from point 7 back to point 8 located in the upper line area.
If you look again, the line of upper line and lower line meet at one point. The point we refer to as the apex. You need to pay attention to the apex for break of upper line which is a confirmation of the symmetrical triangle pattern should not be too close to the apex.
As a general rule, prices should have penetrated the upper line at a distance of approximately 2/3 (two-thirds) to ¾ (three-quarters) of the length of the pattern. "Long pattern" in question is the distance from the baseline to the apex. So, if the breakout occurs less than 2/3 or more than ¾ length pattern, most likely invalid.
Besides occurs during an uptrend, the symmetrical triangle may also occur during the downtrend. Is the same, only its position at the bottom. If in the above example you looking forward break of the upper line as confirmation, and prices tend to move up, so if the pattern occurs at the time break of the downtrend you will look forward to lower line and the price tends to go lower. The only difference.
A symmetrical triangle must have at least four reversal point (reversal point) consisting of two top point and two points of the valley. The picture above shows a symmetrical triangle that has six reversal point, namely point 1, 2, 3, 4, 5 and 6. The confirmation of this pattern is the break of the upper line (upper line). When this pattern has been confirmed, the next movement is rising. How to estimate the target is to be based on the baseline of the symmetrical triangle, which is the distance from point A to 1. So, if for example, its baseline along 100 pips, then the next movement was expected to be as far as 100 pips.
Another way that can be used to estimate the target of the movement is to draw a line parallel with the lower line, where the line starts from point 1.
As another pattern, any pullback could possibly be happening. In the picture above shows a pullback occurs from point 7 back to point 8 located in the upper line area.
If you look again, the line of upper line and lower line meet at one point. The point we refer to as the apex. You need to pay attention to the apex for break of upper line which is a confirmation of the symmetrical triangle pattern should not be too close to the apex.
As a general rule, prices should have penetrated the upper line at a distance of approximately 2/3 (two-thirds) to ¾ (three-quarters) of the length of the pattern. "Long pattern" in question is the distance from the baseline to the apex. So, if the breakout occurs less than 2/3 or more than ¾ length pattern, most likely invalid.
Besides occurs during an uptrend, the symmetrical triangle may also occur during the downtrend. Is the same, only its position at the bottom. If in the above example you looking forward break of the upper line as confirmation, and prices tend to move up, so if the pattern occurs at the time break of the downtrend you will look forward to lower line and the price tends to go lower. The only difference.
Ascending triangle
Basically, the ascending triangle is not much different from the symmetrical triangle from side to analyze it. The second difference is only in its shape pattern.
The ascending triangle is a continuation pattern that typically appears during the uptrend. The emergence of this pattern is a sign that the bearish pressure is getting beyond a bearish pressure gradually.
Basically, the ascending triangle is not much different from the symmetrical triangle from side to analyze it. The second difference is only in its shape pattern.
The ascending triangle is a continuation pattern that typically appears during the uptrend. The emergence of this pattern is a sign that the bearish pressure is getting beyond a bearish pressure gradually.
As with the symmetrical triangle, ascending triangle pattern also must have at least four reversal points. The picture above shows the ascending triangle that has six reversal point. Confirmation of the pattern is a break of the upper line which then has the potential to be followed by bullish movement. How to estimate the target price movement is also similar to a symmetrical triangle, only his baseline instead relied on point 1, but based on the second point.
Although basically the ascending triangle is a continuation pattern, but it also could be a reversal pattern if it occurs during a downtrend. In such circumstances, break of the upper line is a confirmation that the ascending triangle is a reversal pattern. Consider the following picture to facilitate your understanding:
Although basically the ascending triangle is a continuation pattern, but it also could be a reversal pattern if it occurs during a downtrend. In such circumstances, break of the upper line is a confirmation that the ascending triangle is a reversal pattern. Consider the following picture to facilitate your understanding:
Such a pattern is popular with the name of the ascending triangle bottom.
Descending triangle
We talked about the symmetrical triangle and the ascending triangle. Looks like you already have no trouble anymore to understand what kind of triangle-3, which is descending triangle.
Quite simply, the descending triangle is the reverse of the ascending triangle. Simple right? Thus, if the ascending triangle is a bullish pattern, the descending triangle is a bearish pattern. Descending triangle is a continuation pattern that emerged during the downtrend.
Descending triangle
We talked about the symmetrical triangle and the ascending triangle. Looks like you already have no trouble anymore to understand what kind of triangle-3, which is descending triangle.
Quite simply, the descending triangle is the reverse of the ascending triangle. Simple right? Thus, if the ascending triangle is a bullish pattern, the descending triangle is a bearish pattern. Descending triangle is a continuation pattern that emerged during the downtrend.
How, simple right?
Descending triangle can also turn into a reversal pattern if it appears in the current uptrend. His name was modified into a descending triangle top. So the story will be like in the picture below:
Descending triangle can also turn into a reversal pattern if it appears in the current uptrend. His name was modified into a descending triangle top. So the story will be like in the picture below:
b. Flag and Pennant
We will discuss the flag first. Flag is actually a small channel that appears after the rally. Channel direction opposite to the direction of its rally. So, if there is a small channel down which appears after a bullish rally, it is referred to as bullish flag. Instead, up a small channel that appears after a bearish rally called by bearish flag.
Let us consider the following picture:
We will discuss the flag first. Flag is actually a small channel that appears after the rally. Channel direction opposite to the direction of its rally. So, if there is a small channel down which appears after a bullish rally, it is referred to as bullish flag. Instead, up a small channel that appears after a bearish rally called by bearish flag.
Let us consider the following picture:
Yes, that forms the basis of the flag. Now
you already know why this pattern is referred to as a flag: because of
its shape similar to the flag (flag) and poles (Flagpole). Flag represented by a small channel while its Flagpole is the point a to b seen in the picture above.
On the bearish flag, break of the lower line of the channel is up for confirmation. Prices tend to move down if the bearish flag has been confirmed.
Conversely, the bullish flag, the confirmation is a break of the upper line of the down channel. Projected further price movement is bullish if the bullish flag has been confirmed.
How to determine the target price movement is also simple. Flagpole You simply measure the length of its course. Flagpole along that distance termungkinkan to be reached by the price movement. For example, if the length of his Flagpole is 100 pips, then prices will tend to move as much as 100 pips after his flag pattern confirmed.
But in practice, most traders stop (closing position) after the price move "half-way" before reaching the target. For example if the target is 100 pips so far, they tend to stop in 50-60 pips.
General conditions of the flags are as follows:
- There was a small rally before the channel is formed.
- Channel happens to be the direction opposite the direction of the previous rally.
- Long channel (flag) at least one third of the length Flagpole.
OK, we'll discuss the pennant now. Pennant is essentially a development of a symmetrical triangle pattern. Only pennant rally was preceded by a long and steep enough. It could be said that the pennant was the result of interbreeding between the symmetrical triangle with a flag.
Therefore, similar to a symmetrical triangle pennant and flag, then itself rules that apply to the symmetrical triangle and flag also applies to the pennant.
Below is an illustration depicting a pennant shape.
On the bearish flag, break of the lower line of the channel is up for confirmation. Prices tend to move down if the bearish flag has been confirmed.
Conversely, the bullish flag, the confirmation is a break of the upper line of the down channel. Projected further price movement is bullish if the bullish flag has been confirmed.
How to determine the target price movement is also simple. Flagpole You simply measure the length of its course. Flagpole along that distance termungkinkan to be reached by the price movement. For example, if the length of his Flagpole is 100 pips, then prices will tend to move as much as 100 pips after his flag pattern confirmed.
But in practice, most traders stop (closing position) after the price move "half-way" before reaching the target. For example if the target is 100 pips so far, they tend to stop in 50-60 pips.
General conditions of the flags are as follows:
- There was a small rally before the channel is formed.
- Channel happens to be the direction opposite the direction of the previous rally.
- Long channel (flag) at least one third of the length Flagpole.
OK, we'll discuss the pennant now. Pennant is essentially a development of a symmetrical triangle pattern. Only pennant rally was preceded by a long and steep enough. It could be said that the pennant was the result of interbreeding between the symmetrical triangle with a flag.
Therefore, similar to a symmetrical triangle pennant and flag, then itself rules that apply to the symmetrical triangle and flag also applies to the pennant.
Below is an illustration depicting a pennant shape.
c. Wedge Formation and Rectangle Formation
Wedge formation
Wedge is almost similar to the pennant. However, the slope of both lines of its triangular unidirectional, in the sense that both pointing up or down. Degree slope are different, but unidirectional. The picture below will clarify the definition of wedge.
Wedge formation
Wedge is almost similar to the pennant. However, the slope of both lines of its triangular unidirectional, in the sense that both pointing up or down. Degree slope are different, but unidirectional. The picture below will clarify the definition of wedge.
We can identify with regard wedge slope that leads upwards or downwards. As a general rule; almost similar to the flag; the slope of the wedge as a continuation pattern opposite direction to the prevailing trend. Thus, the falling wedge is a bullish pattern while a rising wedge is a bearish pattern.
Note:
Although basically a wedge is a continuation pattern, but can also function as a wedge reversal pattern, but these events are rare. Falling Wedge bullish reversal pattern could be the case at the end of a dowtrend. Conversely, if the rising wedge uptrend appears at the time, then it could be would be a bearish reversal pattern.
Rectangle formation
Rectangle formation has many names, but the pattern is very easy to recognize. This pattern represents a pause that occurs where prices move sideways between two parallel horizontal lines.
Note:
Although basically a wedge is a continuation pattern, but can also function as a wedge reversal pattern, but these events are rare. Falling Wedge bullish reversal pattern could be the case at the end of a dowtrend. Conversely, if the rising wedge uptrend appears at the time, then it could be would be a bearish reversal pattern.
Rectangle formation
Rectangle formation has many names, but the pattern is very easy to recognize. This pattern represents a pause that occurs where prices move sideways between two parallel horizontal lines.
Rectangle sometimes referred to as the trading range or congestion area. Whatever its name, this pattern represents a period of consolidation
in a trend, and is usually followed by movement searag with previous
trends.
A rectangle must have at least four reversal points. In the example image above, you can see an example of a rectangle which has six reversal point. Confirmation bullish rectangle is the rupture of the line or the upper resistance line, rectangle sedangkah bearish confirmation is break of the support line or the lower line.
d. Continuation Head and Shoulders Pattern
Previously, we have discussed about the head and shoulders pattern as a reversal pattern. At the head and shoulders continuation pattern, a pattern is actually exactly the head and shoulders pattern. The difference is the following points:
Head and shoulders pattern emerged during the downtrend. Break of the neckline is confirmed head and shoulders continuation pattern.
Inverse head and shoulders pattern appears when the uptrend. Break of the neckline is a continuation pattern confirmation inverse head and shoulders.
A rectangle must have at least four reversal points. In the example image above, you can see an example of a rectangle which has six reversal point. Confirmation bullish rectangle is the rupture of the line or the upper resistance line, rectangle sedangkah bearish confirmation is break of the support line or the lower line.
d. Continuation Head and Shoulders Pattern
Previously, we have discussed about the head and shoulders pattern as a reversal pattern. At the head and shoulders continuation pattern, a pattern is actually exactly the head and shoulders pattern. The difference is the following points:
Head and shoulders pattern emerged during the downtrend. Break of the neckline is confirmed head and shoulders continuation pattern.
Inverse head and shoulders pattern appears when the uptrend. Break of the neckline is a continuation pattern confirmation inverse head and shoulders.
So do not be confused. All
you need to remember is that the inverse head and shoulders pattern has
bullish implications, while the head and shoulders pattern has bearish
implications, regardless of the current trend of what these patterns
emerge. Easy right?
e. The concept of Supply and Demand
Supply means the availability or supply, while demand means demand.
Using simple language Supply and demand means it is supply and demand, where the offer is the seller, while those making requests ?? is the buyer.
Price is always formed by the law of supply and demand this. If the offer (supply) for goods is high, but demand (demand) of goods is low, then the price will fall. If the demand is soaring but the offer is limited, automatic price spike.
In short, if you are selling a lot, but few are willing to buy, meaning that the goods did not sell. As a result, prices of goods will go down. Conversely, if many are willing to buy but in limited supply, it would sell the goods, the price will skyrocket rise automatically.
e. The concept of Supply and Demand
Supply means the availability or supply, while demand means demand.
Using simple language Supply and demand means it is supply and demand, where the offer is the seller, while those making requests ?? is the buyer.
Price is always formed by the law of supply and demand this. If the offer (supply) for goods is high, but demand (demand) of goods is low, then the price will fall. If the demand is soaring but the offer is limited, automatic price spike.
In short, if you are selling a lot, but few are willing to buy, meaning that the goods did not sell. As a result, prices of goods will go down. Conversely, if many are willing to buy but in limited supply, it would sell the goods, the price will skyrocket rise automatically.
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