Patterns are a very popular and effective way of trading forex, there are wedges, flags, waves and so on, but one of the most effective patterns are triangles.
Identifying Triangles On A Forex Chart.
One of the most important things for forex is to wait for clarity, it is easy to think that the harder you try to find a triangle and the cleverer you are at identifying them the better trader you are. But the total opposite is true, the secret to forex trading is to have clarity, the whole forex market is full of uncertainties and any certainties you may think that appear to turn up will still have uncertainties. Look for obvious triangles and look for them to have more than 2 touches on the trendlines, you need to be absolutely clear about where the trendlines are and hence the right hand corner of the triangle where you are anticipating to trade. Once you have identified a triangle you need to decide what to do when the price reaches the right hand corner of the triangle, one important thing to remember is to trade with the trend, look at what the trend was before the triangle appeared and that gives you one clue to which way the market will be heading. Another thing to look out for is a false breakout, more often than not the price will break out of the triangle just before you get to the right hand corner and will then reverse and breakout the other way.
The Advantages Of Trading A Forex Triangle.
As well as giving you clues as to where the price might break out a triangle will also give you an idea of when the price will break out, it doesn’t necessary mean that you know exactly when the price is likely to break out, but it does eliminate certain times that it is very unlikely to giving you some free time away from the charts. Triangles are simple and well defined, and this helps you form a consistent entry strategy into the forex market, and it’s probably best to stick to triangles that have one line across the horizontal support or resistance level, this will give it extra significance. Simple forex tools always work best since they are easier to understand and clearer to recognise when the setup occurs, and remember that clarity and simplicity are best and don’t to try hard, if it’s not obvious then take it as not being there.