Patterns

Patterns in forex trading are a form of technical analysis which attempts to identify price trends in the exchange rate of different currency pairs. These patterns can help traders identify entry or exit points in the market to maximize their profit potential. While recognizing and trading off of patterns in the forex market can be a lucrative and profitable endeavor, it must be done with caution and cautionary research.

One pattern that traders often look for is an uptrend or downtrend. This type of pattern is usually defined as a series of higher highs and higher lows in an uptrend or lower highs and lower lows in a downtrend. A trader may determine if a trend is forming by monitoring the series of highs and lows, and then enter or exit the market in line with those trends.

Another popular pattern is known as a triangle or flag formation. This type of pattern is formed by two converging trendlines, creating a triangle or flag structure when plotted on a chart.