In this article you will learn the most powerful chart patterns that you should focus on when trading and making profits in Stocks and Forex. There are many price action patterns out there and to make the most profits you need to focus only on the most accurate ones.
The first chart pattern you should focus on is the double top pattern. This is the most frequent chart pattern and also one of the highest accuracy ones, with a 78% win rate. It is also very simple to trade, you enter a trade when price breaks the neckline - while I prefer the more elitistic approach and enter the trade only if price pulls back to the neckline and reverses. This is an even higher accuracy entry point that usually gets traders trades with very low risk and high reward. We highly recommend you identify and trade the Double Top pattern.
The next pattern we urge you to focus on is the Channel. The channel pattern is built from two parallel trend lines that are trending either upwards or downwards. This set-up gives you the opportunity to enter trades at the bottom of the channel (for ascending channels) or at the top of the channel (for descending channels). These entry points are usually very consistent and you can make big profits with just this method. You can also enter trades when the channel is broken and price pulls back to the broken trend line - this is another high-probability setup that you can use to generate very consistent trading profits.
The final pattern that we recommend you trade is the Head & Shoulders channel. This is one of the most accurate chart patterns, that reaches win-rate of 95%. However, it is not so frequent as the rest of the patterns we have described, and it appears around once every 2 weeks in each stock or Forex pair. But when it comes it usually brings big movements and a beginning of a very long-term trend. It is not unfrequent to have trades with risk:reward ratio of 1:10 with this pattern, so it is worth learning to trade this pattern.
In conclusion, there are many chart patterns out there, but it takes a lot of time to learn them all and trade all of them. This is why we have given you 3 basic patterns you can focus on, and still make consistent trading profits while sharpening your intuition and trading “feel". Practise these patterns and you will see that your trading account slowly begins to accumulate profits and money.
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