Chart patterns are patterns which occur in trading charts that help traders predict the probable direction the currency pair is likely to move. Chart patterns may form over any timeframe from a couple of hours to even years. Japanese Candlestick patterns also provide a reliable insight as to where the inmediate direction of the currency pair may head.
Patterns can be divided into two main categories:
- Reversal patterns where the market reverses its direction
- Continuation patterns where the market continues in the same direction after a period of consolidation or retracement