Trading Articles

Wedges are a widespread group of patterns, that are particularly common in the EUR\JPY and GBP\JPY currency pairs. In this article I will describe the methods of trading it for maximum profit.

Visual
The wedge is a chart pattern with two trendlines that are both at the same direction, but with different slope. Its appearance resembles an expansion of range. It is one of the easiest patterns to identify but one of the hardest to trade correctly, and incurs losses to many traders.

Double Tops are one of the most common Chart Patterns. In this article I will teach you to identify and trade this chart pattern.

Identifying The Pattern
The Double Top pattern occurs when price is stopped twice at the same Resistance level. This pattern is also called the 'M', because its resemblance to the letter M. It is one of the most reliable and common patterns - almost 80% of the patterns reach their projected target.

The price level between the two tops is called the Neckline.

In this article we will focus on the more practical side of Pattern Trading: Entries. You will learn the two attitudes at trading that will determine your Risk:Reward ratio, the frequency of your trades and eventually you overall profitability.

As mentioned in part 1 of 'How To Trade Chart Patterns', all trading decision you will make should be based on Support and Resistance. Buy at Support, Sell at Resistance, it is a common truth in trading. But things are a bit more complicated.

Channels are one of the most easy Chart Patterns to identify and trade. This makes them great pattern for beginners. There are few common mistakes to avoid when trading channels, which will be described.

Appearance Of Pattern

Channel is built from two parallel trend lines with the same slope. The distance between the two lines should be visible - if the lines are too close it is not a channel but a pennant. A channel is only valid after at least 3 peaks in one trend line, and 2 peaks on the second trend line.