Pattern Trading: Understanding the Basics and How to Use It
📈 Pattern Trading: Understand Basic and How to Use It
Pattern trading is a popular technique used by traders to make decisions based on historical value patterns in the financial markets. These patterns are made from the value movements of assets such as stock, forex or cryptocurrency over time. Trades who rely on pattern trade believe that historical value patterns can predict future price movements. In this article we will explore the most important concepts behind pattern trading, usually the types of patterns used, and how to effectively use them on your trading strategy.
📌 What is Pattern Trading?
Pattern trading is based on the idea that prices are run in some repeated patterns over time. These patterns may indicate possible future price movements. The belief behind this approach is that the story goes to the markets to repeat, so by recognizing these patterns quickly, traders can make informed decisions about when buying or selling a property.
🧠 Large Concepts in Pattern Trading:
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Trend continuity pattern: They suggest that the price will continue to move in the current direction (either up or down).
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Trend reversal pattern: These suggest that the current trend can turn the direction (ie from a trend to a downturn, or vice versa).
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Consolidation pattern: These show the duration of price consolidation or indecision before an outbreak.
🔍 Types of Patterns in Pattern Trading
Many types of price patterns are used in pattern trading. The most common pattern can be classified into two categories: trend continuity and tendency. Let's look at the main pattern of each group.
1️⃣ Trend Continuity Pattern
These patterns suggest that the market will continue its current trend. Traders seek these patterns when they believe in the past
