the most profitable chart patterns to trade forex.pdf
These patterns are tradable in two ways. The first is at the
time when only the first few bullish or bearish candles have
formed and the move is in its half way to get matured (reach
a support or resistance level). At this time we can buy or sell
and wait until the move ends (or begins to reverse), then
close the trade with profit. However, these are short or
medium time moves and we cannot expect so many pips.
The second better use is to enter a trade when a move has
been matured and a reversal is expected. I also like
weakening and strengthening cascade patterns because they
are very reliable, stable and frequent signals and with
trained eyes they are quite predictable.
12.1.4 Head and Shoulders Pattern
Head and shoulders pattern as its name say is a price
pattern that more or less forms a portrait of a man with
head and shoulders. These are more than 80% probable
patterns and when the left shoulder and the head were
formed, the right shoulder would be a tradable opportunity.
Notice that a right shoulder to be tradable must overlap
more than 80% with the left shoulder, otherwise it will not
be a valid pattern.
Note that charting time frame is essential in detecting
patterns. For example, you may not see a triangle pattern on
a 1-hour chart but when you zoom out the same chart to 4hour time frame the pattern appears. So, to detect perfect
patterns you have to toggle between various time frames.