Justsachin - Trading Patterns

Left Shoulder Head Right Shoulder Neckline

Head and Shoulders

A reversal pattern consisting of three peaks, with the middle peak (head) being higher than the two surrounding peaks (shoulders). It signals a potential trend reversal from bullish to bearish.

Reliability: 83% success rate in forex markets
Best Timeframes: Daily, 4H, 1H
Classic Head and Shoulders (Bearish) Inverse Head and Shoulders (Bullish)
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Left Shoulder Head Right Shoulder Neckline

Head and Shoulders

Reliability: 83% success rate in forex markets
Best Timeframes: Daily, 4H, 1H

Pattern Types:

  • Classic Head and Shoulders (Bearish)
  • Inverse Head and Shoulders (Bullish)

Identification Points:

  • Three peaks with the middle one highest
  • Neckline connecting the lows between peaks
  • Similar shoulder heights
  • Volume typically decreases with each peak

Best Markets:

  • EUR/USD
  • GBP/USD
  • USD/JPY

Trading Tips:

  • Wait for neckline break confirmation
  • Check volume on breakout
  • Place stop loss above right shoulder
  • Target distance equals head-to-neckline measurement

Common Mistakes to Avoid:

  • Trading before neckline break
  • Ignoring volume confirmation
  • Setting stops too tight
Cup Handle Breakout Resistance

Double Top/Bottom

A reversal pattern showing two peaks or troughs at approximately the same price level. Double tops indicate bearish reversals, while double bottoms indicate bullish reversals.

Reliability: 78% success rate when volume confirmed
Best Timeframes: Weekly, Daily, 4H
Double Top (Bearish) Double Bottom (Bullish)
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Cup Handle Breakout Resistance

Double Top/Bottom

Reliability: 78% success rate when volume confirmed
Best Timeframes: Weekly, Daily, 4H

Pattern Types:

  • Double Top (Bearish)
  • Double Bottom (Bullish)

Identification Points:

  • Two peaks/troughs at similar levels
  • Clear neckline as support/resistance
  • Volume typically higher on first peak/trough
  • Space between peaks/troughs (1-3 weeks ideal)

Best Markets:

  • EUR/USD
  • USD/CHF
  • GBP/JPY

Trading Tips:

  • Confirm break of neckline
  • Look for volume increase on breakout
  • Set targets equal to height of pattern
  • Use time filters for confirmation

Common Mistakes to Avoid:

  • Trading minor double tops/bottoms
  • Ignoring market context
  • Missing volume confirmation
Bullish Continuation Rectangle Breakout Support/ Resistance Bearish Continuation Rectangle Breakout Reversal Rectangle Reversal Bullish Continuation: 1. Forms during uptrend 2. Price bounces between parallel levels 3. Breaks upward to continue trend 4. Volume increases on breakout Bearish Continuation: 1. Forms during downtrend 2. Price bounces between parallel levels 3. Breaks downward to continue trend 4. Volume increases on breakout Reversal Rectangle: 1. Forms at end of trend 2. Shows shift in momentum 3. Breaks against prior trend 4. Strong volume confirmation needed

Rectangle Pattern

A consolidation pattern where price bounces between parallel support and resistance levels, indicating a temporary pause in the trend.

Reliability: 75% success rate in trending markets
Best Timeframes: Daily, 4H, 1H
Bullish Rectangle (Continuation) Bearish Rectangle (Continuation) Reversal Rectangle
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Bullish Continuation Rectangle Breakout Support/ Resistance Bearish Continuation Rectangle Breakout Reversal Rectangle Reversal Bullish Continuation: 1. Forms during uptrend 2. Price bounces between parallel levels 3. Breaks upward to continue trend 4. Volume increases on breakout Bearish Continuation: 1. Forms during downtrend 2. Price bounces between parallel levels 3. Breaks downward to continue trend 4. Volume increases on breakout Reversal Rectangle: 1. Forms at end of trend 2. Shows shift in momentum 3. Breaks against prior trend 4. Strong volume confirmation needed

Rectangle Pattern

Reliability: 75% success rate in trending markets
Best Timeframes: Daily, 4H, 1H

Pattern Types:

  • Bullish Rectangle (Continuation)
  • Bearish Rectangle (Continuation)
  • Reversal Rectangle

Identification Points:

  • Clear horizontal support/resistance
  • At least 2 touches of each level
  • Price contained within parallel lines
  • Volume decreases during formation

Best Markets:

  • EUR/USD
  • USD/JPY
  • GBP/USD

Trading Tips:

  • Trade breakout in trend direction
  • Wait for closing price outside rectangle
  • Target equals height of rectangle
  • Place stop beyond opposite boundary

Common Mistakes to Avoid:

  • Trading every bounce
  • Ignoring larger trend
  • Poor risk management