Advanced Chart Patterns in Forex Trading

Forex technical analysis for an intermediate trader shouldn’t be limited to knowing the simplest patterns: discover how to earn with advanced charts and save with STIC Cashback.

In Forex trading, it’s important to learn to use market analysis tools to anticipate moves and profit from price trends. Among the most effective analysis tools, chart patterns are certainly the most widely used, because correctly interpreting them can generate  probable gains.

For an intermediate-level trader, however, it’s not enough to know the basic characteristic chart formations, such as the classic ‘head and shoulders’ or ‘double tops’. Learning advanced chart patterns, such as harmonic patterns or Elliott Waves, allows you to recognise upward or downward trends even in the most volatile contexts, thereby increasing the chances of implementing profitable Forex trading strategies.

Understanding the structure and functioning of more complex charts not only increases the analytical skills of the intermediate trader but also helps them to carry out a higher volume of operations, which allows them to make the most of budget management tools such as the periodic refund of STIC Cashback, as we’ll see later.

How Forex Harmonic Patterns Work

Harmonic patterns are nothing more than recurring chart formations that an intermediate-level trader should be able to identify within a market chart.

Essentially, these patterns are formed by five points (typically named X, A, B, C, and D), through which a path unfolds that identifies the price trend of an asset. Each point represents a trend reversal, and depending on the width of the intervals and the length of the segments between one point and another, the harmonic pattern can take on various conformations, each known by a specific name, such as Gartley, Bat, Butterfly, Crab, or Shark.

Knowing how to recognise the typical nature of these particular ‘ups and downs’ allows you to guess the right moment to enter the market or exit a certain position, to optimise the profit of an operation, also through the use of action automation tools, such as Stop Loss and Take Profit options.

It isn’talways easy to identify the starting point of a harmonic pattern, but its recognisability is aided by the fact that the segments it is composed of often correspond to precise numerical and dimensional ratios, which refer to Fibonacci ratios and can therefore be recognised even by a moderately expert eye.

Elliott Waves in Trading, How to Recognise Them

Similarly, the Elliott Wave theory is based on the recurrence of the alternation of impulsive waves and corrective waves, each strictly linked to the previous one by a certain extension ratio.

Essentially, it’sabout being able to detect a succession of five waves that recurs frequently in price charts, both in the short- and long-term. Correctly interpreting such a nuanced pattern can offer profit opportunities that far outweigh those that can be derived from basic chart patterns.

Basic Chart Patterns, a Must for the Intermediate Trader

The latter, as mentioned, must be in the basic arsenal of any trader. Recognising the characteristic ‘M’ or ‘W’ shape of a ‘head and shoulders’ chart is relatively easy. In this type of formation, in fact, a first peak (left shoulder), a brief downward retracement, a higher peak (head), and, after another small decline, a new reduced peak (right shoulder) are recognisable.

The ‘neckline’, drawn between the two decline points described above, marks the point where it is effective to enter the market and perhaps place a Stop Loss.

Similarly, it works with ‘double top’ charts, where two similar and close peaks foreshadow the market’s inability to go beyond a certain price and therefore the imminence of a marked downward trend.

Earning in Trading with Forex Technical Analysis

But these simple basic patterns are not enough for an intermediate trader who wants to intensify their activity and learn more refined analysis tools. For this reason, harmonic patterns, once understood, allow for equally effective but more remunerative operations. Identifying the fateful point ‘D’ of a harmonic path allows you to take positions on the rise or fall with a significant probability of success.

Moreover, there is no shortage of tools and knowledge that allow correcting on-the-fly evaluations, carried out on the basis of  advanced chart analyses if they prove to be wrong.

For example, a sequence of five Elliott Waves can be easily recognised by an intermediate-level trader, with the third wave typically more extended and the bounces between waves identified by typical intervals. Yet, an operation placed based on such a trend might not give the hoped-for signals, as happens in the presence of a false breakout.

In these cases, a useful correction tool is provided by the search for similar patterns in charts that refer to the same market but are considered over a longer time interval (multi-frame analysis). If the trader’s analysis does not find the recurrence of the waves with the expected frequency, the operation could be closed early, reducing the negative effect on the budget of an initially wrong evaluation.

Advanced Chart Patterns and STIC Cashback Refunds, a Winning Combination

It’s clear to see that Forex technical analysis is an indispensable tool for intermediate traders and allows you to optimise trading profits. But the advantages do not end here: the application of new strategies based on the analysis of advanced chart patterns inevitably helps the trader to also increase the volume of operations carried out.

In this way, a further, attractive scenario opens up. In fact, with a Forex rebate programme like that of STIC Cashback, the greater the trader’s activity in the markets, the more significant the rebate rate assured in their favour as cashback.

For example, if you are an intermediate trader and perform 10 additional operations based on harmonic patterns each month, STIC Cashback offers you a Forex rebate commensurate with that volume of operations, allowing you to obtain extra savings. Getting used to examining advanced chart patterns, therefore, not only sharpens analytical skills but transforms theoretical knowledge into real profit with Forex cashback refunds.

Discover today how STIC Cashback can help you optimise profits when you do technical analysis in trading and get substantial weekly Forex rebates right away!