Trading patterns

Trend

Let's start with a trend definition. It will be used a lot in this article.

A trend is a clear direction of price movement up or down. If the price fluctuates very little, it is not a trend. Here are some examples:

1. Upward trend

2. Downward trend

3. No trend here:

4. And here we have one:

The main goal of any trader is to find a trend. Keep looking for them and try different assets!

Next, we will talk about patterns that can be used for finding a trend U-turn.

Pattern "3 Indians"

Pattern "3 Indians" relates to turnaround models of technical analysis. Very often, this strategy is called "Three Touches". Traders always use this system for opening short-term trades with an expiration time of 30 and 60 seconds.

This method can be applied for:

• Currency pairs
• Indices
• Metals

The main concern here is to find an asset with a clear up or down trend. If there is no trend and fluctuations are almost invisible, then you will not identify a pattern - it is useless.

A chart should contain three tops, and each subsequent should be higher than the previous one. Here is the picture where the tops are marked with green arrows.

When the price reached the last (3rd) top, you need to open a DOWN trade. Here you can see that the trend reversed and went down.

In the same manner, we can look for tops with a downward trend. We find three consecutive minimum points in the chart and press UP.

Be careful, and be sure to practice this system on a demo account first. Also, try to find such models in chart history. Check which assets have this "3 Indians" patterns more often. Good luck and happy trading!

Absorption

Absorption is a strong candle model. It has proven itself in almost all time intervals. There are only two candles in the figure to look for.

The body of the 2nd candle should completely cover the first one, along with its tails. One candle absorbs another one, as a large cloud covers the sun. That's where the name of this reversal came from.

The main criteria for usage of such absorption model:

• It is formed only on a chart with a noticeable trend.
• It consists of two candles. The second candle completely absorbs the body of the first.

Examples:

The red candle completely absorbs the green one.

The "upward" trend changed after the absorption to "downward".

And here is the 2nd case for this situation:

Any absorption changes the trend in the opposite direction. If there was an upward trend, it becomes downward. And vice versa.

Finally, always analyze any patterns in the context of the current market situation: upward or downward. Never put your hopes for a 100% result on a particular pattern. Many newbie traders do not take the whole picture, and when the pattern does not work, they became negative about it. Keep in mind that there are no patterns with 100% success, unfortunately. However, if 8 out of 10 trades are profitable, then it is good enough!

Have good trading!