For example, if we see a long upper wick at the top of an uptrend with some high volume, we know there is a lot of profit-takings, and we can anticipate that the bears are going to start to show up. The chart patterns give the chart a voice, and behind every single chart pattern, there is a story of what is happening. The action of trading based on price patterns is what we refer to trading patterns. The shape of the graph is what differentiates one pattern from another. In other words, chart patterns, or price patterns, are a pictorial representation of the buying and selling pressure that goes on the market. With experience, traders will learn to identify them in real time and see them as trading opportunities.Ī chart pattern is a graphed configuration of reoccurring price movement. Technical analysis requires education and trading experience to understand however, traders can use chart pattern recognition software that highlights chart patterns and help traders draw trading conclusions. Reading Forex chart patterns is synonymous with technical analysis, a trading strategy often used by experienced day traders.
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