What are the patterns on Forex
What are the patterns on Forex?
Given all the difficulties of trading in the Forex market, it can sometimes make it easier for a trader to live in certain patterns by which to predict price movement in a certain direction.
So, let 's look at the main patterns of the currency market.
Trend strength strongly affects the percentage of reversal probability. But the same strength of the trend itself depends on the volume of trading and, above all, on demand and supply;
Flat may change due to a sharp price movement. This happens most often after important news is released;
One market state is not delayed for a long period of time. The price is constantly directed aside with resale or repurchase. This makes it easier to find the correct entry points into the deal;
It is very important to take into account the time factor of the trading session. For example, European and American sessions are considered the most liquid sessions. While the Asian session can often present an unpleasant surprise due to frequent changes in the cost of instruments without qualitative support by trade volumes. Also, this session is more focused on the local currency unit;
The gap is always filled with price. Holidays and weekends periodically cause gapes (price breaks). Quite often this happens after the release of important news in the current period. Usually, gaps are formed in the stock market due to the limited trading time of instruments of this market and due to the low visibility of certain instruments. And at the same time, the direction of the trend does not affect the price that will surely fill the gap;
After a sharp change in price there is always a correction (rollback). And the stronger the movement - the, accordingly, the stronger the correction will be. This situation often occurs after the release of important news.
Typically, a price creates a movement in a certain range, forming a price channel. Price movements are sometimes limited to minimum and maximum. And the more she approached them on a certain side, the more likely it is that she will push away from them.
Too high volatility is always a guarantee of a high spread. It is most likely that such a situation may occur during weekends or holidays, or due to low liquidity on the instrument. More rare - at night.
The market always takes into account expectations and forecasts. Waiting for a certain news to come out affects the exchange rate just like the news itself. That is why the price can move towards the forecast. If the facts and the forecast did not coincide, this could cause dramatic changes;
Also, as people, the exchange rate is subject to the trends of the season. The course movement can be foreseen based on how the instrument behaved during the same period last year.