Top 3 huge profit-making price patterns when trading Forex in Olymp Trade

Top 3 huge profit-making price patterns when trading Forex in Olymp Trade

Price patterns are the overall pictures of supply and demand in the Forex market, showing the battle between buyers and sellers. Based on these price patterns, traders will make the right investment choices. In this article, I will introduce the 3 most important and popular price patterns that help traders to make huge profits when trading Forex in Olymp Trade.

Top 3 huge profit-making price patterns when trading Forex in Olymp Trade

Trends cannot last forever and will eventually change direction. The signs of the trend slowing down, pausing, and changing direction are all shown in detail through price patterns. It is the result of complex interactions between buyers and sellers or between resistance and support levels.

The movements of the price pattern often tend to repeat. If the market keeps reacting the same way every time a certain pattern occurs in the past, chances are that the market will react in the same way when that pattern reappears in the future. Price patterns are of great help to the trading process because they help you forecast the best prices to set stop loss and take profit levels.

Here are the 3 most profitable price patterns for traders when using them.

Head And Shoulders price pattern

The Head And Shoulders pattern is usually formed at the end of an uptrend. It signals a future bullish-to-bearish reversal.

The Head And Shoulders pattern consists of a head (second and highest high) and shoulders (lower high) and a neckline (the line that joins the bottom of the shoulders and represents a support level). The neckline can be horizontal or sloping up/down. The signal is more reliable when the slope is down, not up.

Head and Shoulders price pattern
Head and Shoulders price pattern

This pattern is confirmed when the price breaks out below the neckline after forming the second shoulder. Once that happens, the currency pair will start a downtrend. Therefore, a DOWN order should be placed below the neckline. To get specific targets, you measure the distance between the right shoulder (nearest peak) and the neckline. This distance approximates how much the price will move after it breaks the neckline.

How to enter an order with the Head and Shoulder pattern
How to enter an order with the Head and Shoulder pattern

Note that the price often returns to the neckline after the breakout has taken place. In this case, the neckline will change from a support level to a resistance one.

Triple Bottom price pattern

The Triple Bottom is a type of Forex price pattern that identifies a market reversal from bearish to bullish. It consists of 3 bottoms shaped like 3 Vs joined together with 2 tops shaped like the letter A and a breakout point above the resistance level.

Triple Bottom price pattern
Triple Bottom price pattern

This pattern usually appears at the end of a downtrend with great accuracy. You will have 2 ways to enter a safe order as follows.

  1. When the price breaks out, you can enter the order at that moment if you are afraid of losing the opportunity.
  2. Waiting for the price to break the neckline and return to retest is the time when you start placing safe orders.
How to enter an order with the Triple Bottom price pattern
How to enter an order with the Triple Bottom price pattern

Here are a few things that you should pay attention to about the 3-bottom pattern so that you can better plan your trade when encountering it.

Before starting to form a pattern, the market must be in a downtrend.

  • The pattern is complete when the price breaks out of the resistance level after forming the 3rd bottom.
  • If the 3rd bottom is higher than the 2nd bottom, the uptrend will be stronger.
  • This is the type of pattern with the longest formation time on the market. Therefore, during its formation, it can be easily mistaken for a Double Bottom.
  • The resistance level of this pattern would be considered the neckline.

Any price pattern has flaws, so always place a stop loss to protect your account.

Cup and handle pattern

Cup and Handle pattern gives us information that the price will increase sharply shortly. It has the same appearance as the cup with a handle commonly found in life.

Cup and handle pattern
Cup and handle pattern

Here are some salient features to note:

  • The first is a pattern shaped like a cup and a handle. In some cases, the handle may not be formed as the price moves up instead of a slight correction.
  • Second, the pattern usually appears at the end of an uptrend. However, where the pattern is formed is not so important.
  • Next, the bottom of the cup is usually shaped like a U-shaped arch, which is usually more reliable than a V-shape.
  • Finally, the depth of the handle should not be more than 50% of the depth of the cup body.

The way to enter orders is very simple with the Cup and Handle price pattern. That is to place an Up order as soon as the price forms a handle and breaks out the top of the cup as shown below.

How to enter orders with Cup and Handle price pattern
How to enter orders with Cup and Handle price pattern

In reality, the pattern you see on the chart when trading will be much worse and quite difficult to recognize than the pattern in theory. Therefore, you need to carefully observe and analyze carefully to ensure the accuracy of the pattern.

Some notes when using price patterns to trade Forex in Olymp Trade

Price patterns in Forex give traders a lot of benefits. The most important of which is predicting the future trend of the market. It can be said that the price patterns are things that traders cannot ignore if they want to make profits. However, to use it effectively in Forex, traders should note a few things.

Technical indicators are also extremely important tools to help investors make judgments and assessments in their strategies. Therefore, investors should apply in combination with the price pattern to make the best options.

The best time to trade with price patterns is at the Breakout point or when the price retests the support or resistance level. When trading, traders need to wait patiently for the price patterns to form and have a confirmation point.

Forex is a risky channel and no one can be sure that the choice they make is correct. Therefore, always be prepared for risk and always take profit and stop loss in every trade.

Conclude

In the above article, I have introduced to you the 3 most popular Forex price patterns in Olymp Trade. Hope the article helps you have an overview of these price patterns and choose the right one.

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Top 3 huge profit-making price patterns when trading Forex in Olymp Trade
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