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[Oluti]

Using technical analysis charts is a very popular method for informing forex trades. While there are an almost endless number of ways in which you can do this, with several chart types and countless indicators, we have used candlestick charting in all of these examples for the sake of comparability. In general, Candlestick charts give you more information than other common types such as line, OHLC or area charts, and are therefore the most useful for recognizing price patterns across all time frames.

Here, we are going to show you how to recognize three of the most common patterns, namely Head & Shoulders, Engulfing Patterns, and Triangles. and give suggestions as to how to trade them.

Head and Shoulders (H&S)

This type of pattern can either take the form of a topping formation after an uptrend, or a bottoming formation after a downtrend. Topping formations take the form of a price high, then a retracement, then a higher price high then a further retracement followed by a lower low. Bottoming formations can be characterized by a low(first shoulder), a retracement followed by a lower low (the head) and a retracement then a higher low (second shoulder). The pattern can be considered complete when the trendline (or ‘neckline’) that connects the two highs in the bottoming pattern, or the two lows in the bottoming pattern, is broken.



This pattern is easy to trade because it gives you an entry level, a stop level and a profit target.

Entry Order: This should be set at the point where the ‘neckline’ is broken.
Stop Loss Level: If you are employing a conservative trading strategy, then the stop level should be placed below the right shoulder, but if you are willing to take on more risk and therefore increase the chances of hitting your profit target, you could set it somewhere below the head instead.
Profit Target: Add the breakout point to the height of the formation.

Triangles

These patterns are very commonplace across shorter time frames, and can be ascending, descending, or symmetric (as seen in the chart below). While the various types of triangle may look different, there is not that much difference between them in practical trading terms. A triangle occurs when prices converge, with the highs and lows narrowing into an increasingly narrow price area.



Like H&S patterns, triangles are easy to trade because they provide an entry level, a stop loss level, and a profit target, which can be set as follows:

Entry Order: This should be set at the point where the perimeter of the triangle is penetrated.
Stop Loss Level: Set this at the lowest point of the pattern.
Profit Target: Add the height of the pattern to the entry price.

Engulfing Pattern

These patterns are easy to spot on shorter time frames, and often give rise to a strong and immediate change in the price direction of a currency pair. In an uptrend, a down candle real body will completely engulf the previous candle real body, and this is called ‘bearish engulfing’. In a downtrend, an up candle real body will engulf the prior down candle real body, and this is known as ‘bullish engulfing’.


The reason this pattern is so easy to trade is because the price action shows a strong reversal, with the previous candle having already been completely reversed. This gives the trader the opportunity to capitalize on what could be a strong trend, while covering themselves against losses with a stop. There is no specific formula for the profit target for this pattern, but the entry and stop levels should be set as follows:

Entry Order: Set this at the open of the first bar after the formation of the pattern.
Stop Loss Level: Place this below the low of the pattern.

 

[lioralace]

Alright, let’s just cut through the buzzwords and get to what actually works in forex trading, yeah? If you’re trying to make sense of those wild, squiggly charts, the secret sauce isn’t magic—it’s technical analysis. And within that, candlestick charts? Absolute gold. Line charts are, honestly, for your grandma tracking her retirement fund. Candlesticks actually show you the real mood swings of the market, and pretty soon, you’ll feel like a therapist for currency pairs.

So, here’s what you actually need to know. Three chart setups that don’t require a degree in rocket science: Head & Shoulders, Triangles, and Engulfing Patterns. Learn these, and suddenly forex starts looking a lot less like a casino.

### 1. Head & Shoulders—Spotting When the Party’s Over

This pattern is trader legend—and for good reason. You’ll see it when a party in the market is winding down. Basically, you get three peaks: a shoulder, then a higher head, then another shoulder. The real voodoo’s in the neckline—draw a line under the dips between shoulders and head.

• Entry? Jump in when price crashes through that neckline.
• Stop loss? Right under the last shoulder (or the head if you like to live dangerously).
• Profit? Measure from the neckline up to the head, then go that far down past the break.

Why’s this work? It’s a sign traders just ran out of fumes and, well, the trend’s probably about to flip. Honestly, it feels pretty sweet when you call it right.

### 2. Triangles—The Pressure Cooker

Triangles are like watching a pot boil—it gets all wound up tight, then boom, explodes somewhere. You’ll see price start making lower highs and/or higher lows, squishing into a triangle. Once it breaks out? Go time.

• Where’s your entry? Right when price busts out of the triangle.
• Stop? Set it just inside the bottom of the triangle—not too far, don’t get greedy.
• Target? Add the base of the triangle to the breakout.

Doesn’t matter if the triangle points up, down, or does a weird symmetrical thing—the idea’s the same. You’re betting all that built up energy launches a big move.

### 3. Engulfing Patterns—Candles with Drama

These are for traders who hate overthinking. When a big green candle gobbles up the little sad red one at the bottom of a move? Bulls might be out for blood. Flip it for the top of a trend: giant red candle swallows a smaller green? Bears are hungry.

• Hop in at the open of the next candle.
• Stop just below (or above) the engulfing candle.

No fancy target, really—use your head and maybe some support/resistance. Ride that wave till it fizzles.

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So, here’s my take: If you’re trying to stop getting wrecked in forex, focus on spotting these three chart patterns. They’re obvious, repeat all the time, and you don’t need to be some Wall Street genius to use 'em. Go mess around on a demo account before the real money’s on the line. There’s no shortcut, but there is a cheat code—it’s literally practice and paying attention. Now get out there and start picking through those charts. And remember, the market really doesn’t care about your feelings—or your gut, for that matter.

 

[perlcode]

There are three types charts in Forex platform, line chart, bar chart, and candlestick chart. From the three mantioned the most widely used among traders is the candlestick chart because easy to understand in one stick candlestick already contains information open, high, low and close in particular timeframe, so if we using daily timeframe we can see the open price, low, high and close in a day market, But if we use h1 timeframe, it represents one candlestick in one hour market, we can see open, low, high and close in one hour market. Using candlestick also we can modify the color for bullish and bearish based own preference. Usually I like use black color for bulls candles and white for bearish candles in my chart MT4 FXOpen.