When trading Forex one can trade many set-ups that appear to be profitable but actually can lead to more losses than profits. In this article we will cover several of the best set-ups that have been profitable for years.
Pattern #1: Channel Pattern
The Channel is one of my favorite pattern for trading stock charts and Forex, because it is so easy to identify and trade correctly. The Channel is basically two parallel trend lines that bound price, governing the trend. We usually enter trades with the trend when price bounces off one of the trend lines and set profit target on the opposite trend line. This is profitable trading method that leads to big profits in Stocks, Commodities and Forex, and requires very little trading experience. We will also trade breakouts of the channel sometimes, in case it breaks against the trend.
Pattern #2: Double Top
The Double Top occurs when a stock tests a resistance level twice and is unable to break it, and eventually breaks downwards and a bearish move begins. We usually trade this pattern when price breaks the neckline and we join the trend at the pullback to the broken neckline. This chart pattern usually has 73% win rate which is very good and can provide consistent profits.
Pattern #3: Asymmetric Triangle
The Asymmetric triangle is one of the most neat chart patterns, as it is very easy to identify and also has a remarkable win rate of 76%. It consists of an asymmetric triangle that has one trend line and one horizontal level that price eventually breaks through. As with the Double Top, we enter such trades after price pulls back to the broken horizontal level, with tight stop loss and only if risk:reward is at least 1.5:1.
In conclusion, those 3 patterns are very accurate and can generate amazing signals on countless Forex pairs. It is a general opinion that for a trading system to be considered profitable it must be profitable on any Forex pair, and these patterns all pass this test easily.