Best Forex Indicators - The Chart Patterns I Use to Recognize Market Moves Before They Happen
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Best Forex Indicators - The Chart Patterns I Use to Recognize Market Moves Before They Happen
By Christopher M. Hall
Best forex indicators - if you have ever looked at any kind of trading chart, you know that they can be quite confusing. Just looking at the bars, the lines, the ups, the downs can make you think that it is just a bunch of nonsense that people made up just to make themselves feel important. But trust me, there is logic behind the madness, and chart patterns can help you make sense of it all.
OK - I am going to tell you right now that I am at a severe disadvantage. It is very difficult to explain chart patterns when you are looking right at them, but it is nearly impossible to describe them using words alone. But don't let that discourage you. Read this article to get used to the terminology and then do some searching on the Internet to see examples.
Let's start with one of the best forex indicators - a double top pattern.
A double top pattern is when price reaches a high, drops down a little, reaches that same high again, and then drops again. The double top is the 2 times that the price hit the high. Why did the price fall back each time?
Double tops indicate that there are banks, corporations, or very rich people that don't want the price to go any higher, so both times when the price reached the high, these people did some serious selling to cause the market to fall. 
The tops indicate a decision point in the market. Either the price will test the high again and fall or the buyers may overwhelm the sellers and cause the market to shoot straight through the double top.
Double bottoms are the same thing except with the market falling. The market hits a low twice, and each time buyers cause the market to rise again.
Of course, triple tops / bottoms, quadruple tops / bottoms, etc exist. The more times the market hits a price and reverses indicates that you want to watch that price even more carefully to see how the market reacts next time it approaches that level.
Chart patterns are more than just a connect-the-dots exercise; they reflect the battle between buyers and sellers that happens everyday in every market. Learn common patters and you learn the market. Learn the market and you make money. That is why chart patterns are one of the most profitable and best forex indicators you can use.
Here is a list of a few more common ones that you can investigate.
1. 1-2-3 pattern
2. Head and shoulders
3. Reverse head and shoulders
4. Ascending triangles
5. Descending triangles
6. Symmetrical triangles
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