At first glance, chart patterns seem a relatively simple concept to understand and by all the infographics available, easy to trade and make a profit, but if you think about how easy it is to find a forex chart patterns cheat sheet, it has to make one wonder, if these patterns were so successful why would they be so freely available? Or would those in a position to make a profit from them keep them a closely guarded secret?
The perfectly drawn examples and their easily hit profit targets are exactly that, perfectly drawn examples. Good luck trying to find a textbook example on your charts, not only because the market doesn’t adhere to lines drawn on our charts as well as because chart patterns are subjective, one trader may see a completely different pattern from the next trader.
In our previous article, Bull Flag VS Bear Flag: Secrets To High Probability Trades, we looked into the flag patterns and their effectiveness in helping us find profitable trading setups. In our case study, we found that these patterns were wildly more successful when combined with smart money concepts, both by helping with more accurate entries and target placement as well as keeping us out of what would have been losing trades.
Then in Supply and Demand in Forex: Secrets To 10X Your Results, we combined a simple candlestick pattern (engulfing candle) with supply and demand concepts, which took a mediocre pattern to what at first glance looked to be the makings of a profitable strategy.
In this article, we will look into some of the more popular forex chart patterns, firstly in their traditional sense, then combined with smart money concepts.
So in this article, what we will be doing is building our own and also more relevant cheat sheet of how to get the most out of forex chart patterns by viewing them not as stand-alone patterns but as part of a bigger narrative.
Viewing the market from this perspective gives the trader not only the ability to no longer rely blindly on these chart patterns without understanding why these chart patterns form but also to be able to trade them when the probability of a successful outcome is the highest as well as dramatically increasing the risk to reward ratio.
So, let’s take a deep dive into the different types of chart patterns:
