Forex Dance Patterns

REVERSAL PATTERNS – Technical Chart Analysis


Jul.18.2013

Reversal patterns are chart patterns that, when confirmed, indicate that the trend of a currency pair will reverse. Here is a list of some of the coolest and most trusted ones:

  1. Double top or double bottom.
  2. Triple top or triple bottom.
  3. Head and shoulders top or bottom.
  4. Saucer top or saucer bottom.

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Aren't these names cute?

Using Reversal Patterns in Chart Analysis

Reversal patterns can either change an uptrend into a down trend, or a down trend into an uptrend. Here is a list of all of the important bearish reversal patterns and the images they resemble.

 Bearish Reversal Patterns Cheat Sheet Bearish Reversal Patterns Cheat Sheet

For example, a Saucer Top is considered a bearish signal, indicating a possible reversal of the current uptrend to a new downtrend.

Here is the list of all bullish reversal patterns.

 

Bullish Reversal Patterns - Cheat Sheet Bullish Reversal Patterns - Cheat Sheet

 

 

For example, in a Head and Shoulders Bottom the resistance level or neckline is determined by connecting the highs of each valley. Once this level is broken, the head and shoulders bottom pattern is confirmed. This indicates a new willingness of investors to buy at higher prices.When the neckline's slope is up, it produces a more reliable signal.

 

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Check out my book, Invest Diva's Guide to Making Money in ForexFor really cute images of all the metaphors we use for reversal patterns. They are going to blow your mind. Depending on the direction of the trend (up or down), each of these patterns can indicate either a top or a bottom, but they are basically the same thing and have the same shape, and we can expect a trend reversal when we identify one.

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