Chart Patterns

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Chart patterns are on-chart price action patterns that have a higher than average follow-through probability in a given direction. These trading patterns offer significant clues to price action traders in their Forex trading decision process using technical chart analysis. Each pattern in the chart has the potential to push the price towards a new move. Forex traders thus tend to identify chart patterns to take advantage of the upcoming price fluctuations.

Type of Chart Patterns

Forex trading patterns are divided into groups based on the potential price direction of the pattern. There are three main types of chart patterns classified in Forex technical charting.

Continuation Chart Patterns

The trend continuation chart pattern appears when the price is trending. If you spot a continuation chart pattern during a trend, this means the price is correcting. In this manner, continuation patterns indicate that a new move in the same direction is likely to occur. Some of the most popular continuation chart formations are pennants, rectangles, and corrective wedges.

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