Head and Shoulders
A reversal pattern consisting of three peaks, with the middle peak (head) being higher than the two surrounding peaks (shoulders). It signals a potential trend reversal from bullish to bearish.
Reliability: 83% success rate in forex markets
Best Timeframes: Daily, 4H, 1H
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Head and Shoulders
Reliability: 83% success rate in forex markets
Best Timeframes: Daily, 4H, 1H
Pattern Types:
- Classic Head and Shoulders (Bearish)
- Inverse Head and Shoulders (Bullish)
Identification Points:
- Three peaks with the middle one highest
- Neckline connecting the lows between peaks
- Similar shoulder heights
- Volume typically decreases with each peak
Best Markets:
- EUR/USD
- GBP/USD
- USD/JPY
Trading Tips:
- Wait for neckline break confirmation
- Check volume on breakout
- Place stop loss above right shoulder
- Target distance equals head-to-neckline measurement
Common Mistakes to Avoid:
- Trading before neckline break
- Ignoring volume confirmation
- Setting stops too tight
Cup and Handle
A bullish continuation pattern resembling a cup with a handle, indicating a pause in an uptrend before continuation.
Reliability: 80% success rate when properly formed
Best Timeframes: Weekly, Daily, 4H
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Cup and Handle
Reliability: 80% success rate when properly formed
Best Timeframes: Weekly, Daily, 4H
Pattern Types:
- Classic Cup and Handle
- Inverted Cup and Handle (Bearish)
Identification Points:
- U-shaped cup formation
- Smaller handle pullback
- Rounded bottom in cup
- Volume decreases in handle
Best Markets:
- EUR/USD
- GBP/USD
- USD/CHF
Trading Tips:
- Enter on handle breakout
- Check volume increase on break
- Target based on cup depth
- Stop below handle low
Common Mistakes to Avoid:
- Trading shallow cups
- Ignoring volume patterns
- Premature entry
Channel Patterns
Price movements contained between parallel trendlines, showing a consistent trend direction.
Reliability: 82% success rate in trending markets
Best Timeframes: Daily, 4H, 1H
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Channel Patterns
Reliability: 82% success rate in trending markets
Best Timeframes: Daily, 4H, 1H
Pattern Types:
- Ascending Channel (Bullish)
- Descending Channel (Bearish)
- Horizontal Channel (Range)
Identification Points:
- Parallel trendlines
- At least 3 touches each side
- Consistent slope
- Regular price oscillation
Best Markets:
- EUR/USD
- USD/JPY
- GBP/USD
Trading Tips:
- Trade bounces off boundaries
- Wait for confirmation candles
- Use channel width for targets
- Place stops beyond channel
Common Mistakes to Avoid:
- Forcing parallel lines
- Trading every touch
- Ignoring broader trend