The forex market creates price patterns that resemble patterns. It’s quite amazing that these shapes are beneficial and can be used to trade profitably. The price action creates these unique designs based on the interactions of different market forces. The prices have also been proven in the past and have an advantage that traders can benefit from.
The challenge is in identifying these patterns within the market. The market for forex tends to fluctuate in a random manner and identifying the pattern isn’t an easy task, particularly for those who are new to the field. That’s where the Price Patterns indicator is useful.
The indicator can be used for trading any foreign currency. Although you can apply the indicator to any time period, it is best with a longer time frame. The most common patterns on daily, weekly, or 4-hour weekly and daily time frames tend to be the most powerful.
How to use this indicator?
Its Price Pattern indicator scans the price chart and highlights the various patterns in the price chart. It labels and shades patterns, making them easier to spot. To make it more precise the price pattern that indicates a possible trend reversal towards the upside is a great buy signal.
For example to illustrate, if the triple bottom is formed within the zone of support, then you must be prepared to purchase. A similar triangle pattern during an uptrend can be an indicator of continuation of the trend. It is therefore advisable to prepare to purchase or increase positions. However that head-and-shoulder price pattern suggests an eventual trend reversal that could lead to an bearish market. This is why it’s an excellent sell signal.
The pattern of the wedge signals an ongoing trend. The price jumped significantly following that pattern was created.
The market also creates a head-and-shoulder shape as seen in the that is shaded by light coral. The head-and-shoulder pattern could indicate potential trends reversals that can lead to market that is bearish. Thus the bears are set to pull the price down and you must be prepared to put in an order to sell. Put your stop loss over the head (topmost highest point).
This Price Patterns indicator is an excellent instrument for traders who trade on price action. It is easy to use and can be time-saving. You don’t have to try to memorize all of the patterns into your head. The indicators will identify patterns automatically for you. You can simply place your trade based on the current signal. It is advisable to integrate the signal into your strategy for trading.