Chart Patterns
Traders frequently utilize a number of chart patterns to examine price changes in financial markets. Eight major categories of chart patterns are as follows:
1. Head and Shoulders
2. Double Top and Double Bottom
3. Triple Top and Triple Bottom
4. Cup and Handle
5. Rounding Bottom
6. Flags and Pennants
7. Wedges
8. Triangles (Ascending, Descending, and Symmetrical).
Every pattern is different and might indicate future changes in the market, which gives traders more information with which to make judgments.
A key component of technical analysis in forex trading, chart patterns are a visual formation on a price chart created by the price movements of a currency pair. They are the result of psychological interactions between market participants and reflect the supply and demand balance. Traders use chart patterns to predict future price movements based on historical price data.