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
Ascending Channel (Bullish) Upper Target Resistance Support Descending Channel (Bearish) Lower Target Resistance Support Horizontal Channel (Range) Resistance Support Buy Zone Sell Zone Ascending Channel: 1. Parallel upward sloping lines 2. Buy at support, sell at resistance 3. Breakout targets equal channel width 4. Higher highs and higher lows 5. Confirms bullish trend Descending Channel: 1. Parallel downward sloping lines 2. Sell at resistance, buy at support 3. Breakdown targets equal channel width 4. Lower highs and lower lows 5. Confirms bearish trend Horizontal Channel: 1. Parallel horizontal lines 2. Buy at support, sell at resistance 3. Indicates trading range/consolidation 4. Breakout direction signals new trend 5. Width indicates volatility Trading Guidelines: • Minimum 4 touch points required • Channel width should remain consistent • Volume confirms trend strength • False breakouts common - wait for confirmation • Risk management essential at boundaries

Channel Patterns

Price movements contained between parallel trendlines, showing a consistent trend direction.

Reliability: 82% success rate in trending markets
Best Timeframes: Daily, 4H, 1H
Ascending Channel (Bullish) Descending Channel (Bearish) Horizontal Channel (Range)
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Ascending Channel (Bullish) Upper Target Resistance Support Descending Channel (Bearish) Lower Target Resistance Support Horizontal Channel (Range) Resistance Support Buy Zone Sell Zone Ascending Channel: 1. Parallel upward sloping lines 2. Buy at support, sell at resistance 3. Breakout targets equal channel width 4. Higher highs and higher lows 5. Confirms bullish trend Descending Channel: 1. Parallel downward sloping lines 2. Sell at resistance, buy at support 3. Breakdown targets equal channel width 4. Lower highs and lower lows 5. Confirms bearish trend Horizontal Channel: 1. Parallel horizontal lines 2. Buy at support, sell at resistance 3. Indicates trading range/consolidation 4. Breakout direction signals new trend 5. Width indicates volatility Trading Guidelines: • Minimum 4 touch points required • Channel width should remain consistent • Volume confirms trend strength • False breakouts common - wait for confirmation • Risk management essential at boundaries

Channel Patterns

Reliability: 82% success rate in trending markets
Best Timeframes: Daily, 4H, 1H

Pattern Types:

  • Ascending Channel (Bullish)
  • Descending Channel (Bearish)
  • Horizontal Channel (Range)

Identification Points:

  • Parallel trendlines
  • At least 3 touches each side
  • Consistent slope
  • Regular price oscillation

Best Markets:

  • EUR/USD
  • USD/JPY
  • GBP/USD

Trading Tips:

  • Trade bounces off boundaries
  • Wait for confirmation candles
  • Use channel width for targets
  • Place stops beyond channel

Common Mistakes to Avoid:

  • Forcing parallel lines
  • Trading every touch
  • Ignoring broader trend