Trend is Your Friend
Technical Analysis
Technical Analysis (TA) in Forex and Crypto trading is the study of price charts, patterns, and indicators to forecast future price movements. Unlike fundamental analysis (which focuses on news, economy, interest rates, etc.), technical analysis is all about price action and market psychology.
Types of Trend
UpTrend
An uptrend is a series of higher highs (HH) and higher lows (HL) on the price chart.
It indicates that demand is increasing and traders expect the currency’s value to continue rising.
How to identify:
- Draw an upward trendline connecting the higher lows.
- Look for bullish candles forming above moving averages.
DownTrend
A downtrend is a series of lower highs (LH) and lower lows (LL) on the price chart.
It indicates that supply is greater than demand, and traders expect the currency’s value to keep falling.
How to identify:
- Draw a downward trendline connecting the lower highs.
- Look for bearish candles forming below moving averages.
Sideways Trend
A sideways trend occurs when the price moves between a horizontal support and resistance level, showing no strong buying or selling pressure.
It indicates market indecision — buyers and sellers are roughly equal in strength.
How to identify:
- Price bounces up and down between two horizontal lines (support and resistance).
- No pattern of higher highs or lower lows — just flat movement.
All in One
Support
- Support is a price level where the market tends to stop falling and bounce upward.
- It shows an area where buyers are stronger than sellers.
- Traders look to buy near support because it’s considered a “floor” for the price.
Resistence
- Resistance is a price level where the market tends to stop rising and move downward.
- It shows an area where sellers are stronger than buyers.
- Traders look to sell near resistance because it’s considered a “ceiling” for the price.
Supply
A supply zone is an area where selling pressure is strong — traders want to sell, so the price tends to fall from this zone.
It represents high supply and low demand.
Traders’ action: Look for sell opportunities when the price reaches this zone.
Demand
A demand zone is an area on the chart where buying pressure is strong — traders want to buy, so the price tends to rise from this zone.
It represents high demand and low supply.
Traders’ action: Look for buy opportunities when the price reaches this zone.
Breakout
A breakout happens when the price moves beyond a key support, resistance, or chart pattern with strong momentum.
It signals that market sentiment has changed, and a new trend may be starting.
Pullback
A pullback is a temporary move against the main trend after a breakout.
It’s like the market “taking a breath” before continuing in the breakout direction.
Traders often wait for a pullback to enter at a better price after confirmation.
Chart Patterns
Reversal Patterns
A reversal pattern is a chart pattern in technical analysis that signals a possible change in the direction of the current price trend — from uptrend to downtrend or vice versa.
There are two main types depending on the direction of the reversal:
Bearish Reversal Patterns
Indicate a potential uptrend turning into a downtrend
1.Head and Shoulder
The Head and Shoulders pattern is one of the most reliable and well-known bearish reversal patterns in technical analysis. It usually forms after an uptrend and signals that the market trend is about to reverse from bullish to bearish.
In short, the Head and Shoulders marks the shift from an uptrend to a downtrend, and the neckline breakout is the signal that confirms the change in direction.
2.Double Top
A double top pattern is formed after a market’s price reaches two highs consecutively with small declines in between. It forms an M-shape on a chart.
The double top is a bearish reversal pattern, so it’s thought that the asset’s price will fall below the support level that forms at the low point between the two highs. It’s crucial to confirm this support level, as basing your trade solely on the formation of the two peaks can cause a false reading.
In a double top, an upwardly trending market twice tries to hit new highs. But both times, it retraces as sellers drive the price back down – a sign that bullish momentum may be on the wane.
3.Rounded Top and Bottom
A rounded top or bottom are both reversal patterns. A rounded top appears as an inverted U-shape, and indicates an imminent downtrend, while a rounded bottom appears as a U and occurs before an uptrend.
Again, the price action here is similar to a double top or bottom, but this time it plays out across more sessions than just two.
In a rounded top, the buying sentiment is still gaining ground at the beginning – as evidenced by the higher highs hit by the market. But then, a series of lower highs offers a strong signal that sellers are beginning to take control.
4.Rising Wedge Pattern
A Rising Wedge forms when:
Price makes higher highs and higher lows,
But the slope of the lows is steeper than the highs,
Meaning the range between them is narrowing upward (price is “squeezing”).
This shows weak momentum in the uptrend — buyers are pushing prices up, but with less power each time.
Bullish Reversal Patterns
Indicate a potential downtrend turning into an uptrend
1.Double Bottom
A double bottom is, perhaps unsurprisingly, the opposite of a double top. It’s formed when a market’s price has made two attempts to break through a support level and failed. In between, there has been a temporary price rise to a level of resistance. It creates a W-shape.
The double bottom is a bullish reversal pattern because it typically signifies the end of selling pressure and a shift towards an uptrend. Therefore, if the market price breaks through the resistance level, it is likely to continue rising.
2.Reverse Head and Shoulder
An Inverse Head and Shoulders (also called Upside-Down Head and Shoulders) forms after a downtrend and indicates a trend reversal to the upside.
It consists of three lows:
Left Shoulder: A temporary low followed by a small rally.
Head: A deeper low (the lowest point of the pattern).
Right Shoulder: A higher low (shows buyers gaining strength).
3.Falling Wedge Pattern
A Falling Wedge Pattern in forex trading is a bullish chart pattern that indicates a potential uptrend reversal or continuation, depending on where it appears in the market.
It typically forms when the market is in a downtrend, showing that sellers are losing control while buyers are slowly gaining strength.
In a falling wedge, the price moves between two downward-sloping lines — one connecting lower highs and the other connecting lower lows.
4.Cup and Handle
The cup-and-handle pattern is similar to a rounded bottom, except it has a second, smaller, dip after it. The second smaller curve can resemble a flag pattern if the trend lines are parallel to each other.
You can think of a cup and handle as like a double bottom that’s followed by another smaller double bottom, delaying the beginning of the uptrend but not preventing it.
And like a double bottom, the cup-and-handle is a bullish reversal pattern.
Continuation Patterns
1.Flag Bullish and Bearish
A Flag Pattern in forex trading is a continuation pattern — it signals that the current trend (either bullish or bearish) will likely continue after a short pause. The pattern looks like a small flag on a pole, which is why it’s named that way.
It can form in both directions:
A Bullish Flag appears during an uptrend.
A Bearish Flag appears during a downtrend.
2.Pennant Bullish and Bearish
A Pennant Pattern in forex trading is a continuation pattern, very similar to the flag pattern, but with a small difference in shape. Instead of forming a rectangular consolidation (like the flag), the pennant forms a small triangle — showing that the market is pausing briefly before continuing in the direction of the main trend.
A bullish pennant forms after a strong upward move known as the flagpole.
A bearish pennant is the mirror opposite. It forms during a strong downtrend after a sharp drop (the flagpole).
3.Rectangle Pattern
A Rectangle Pattern in forex trading is a continuation or consolidation pattern that forms when price moves sideways between two parallel horizontal levels — one acting as support and the other as resistance.
It shows a period of indecision in the market where neither buyers nor sellers have full control.
A bullish rectangle appears during an uptrend.
A bearish rectangle forms during a downtrend.
4.Ascending Triangle
An Ascending Triangle usually forms during an uptrend and signals a bullish continuation.
In this pattern, the price creates a horizontal resistance line at the top and a rising support line at the bottom. This means that buyers are getting stronger because each new low is higher than the last, while sellers are struggling to push the price below resistance.
As the price keeps bouncing between these two lines, it gradually squeezes upward. When the buying pressure becomes strong enough, the price breaks above the resistance line, confirming the bullish breakout.
5.Descending Triangle
A Descending Triangle usually forms during a downtrend and signals a bearish continuation.
Here, the price forms a horizontal support line at the bottom and a descending resistance line at the top. This shows that sellers are becoming more aggressive — each new high is lower than the last — while buyers are defending a support level.
Eventually, the pressure from sellers builds up, and the price breaks below the support line, confirming a bearish breakout.
Bilateral Patterns
1.Symmetrical Triangle
Symmetrical triangle patterns occur when two trend lines approach one another. Essentially, it’s like if you overlaid an ascending triangle onto a descending one.
It’s often considered a continuation pattern because the market usually continues with the prevailing trend. However, if there is no clear trend before the pattern forms, it’s a bilateral pattern and the price could go in either direction. Once a breakout in either direction is confirmed, it suggests that the trend is likely to continue in that direction.
To trade a symmetrical triangle, be ready for the market to break out in either direction. Then watch to see whether that turns into a new trend, and buy or sell accordingly
2.Wedge
A wedge pattern is similar to a flag, except that the lines tighten toward each other instead of running parallel. As the pattern progresses, it often coincides with a decline in volume.
A wedge pattern can either be rising or falling. After a rising wedge pattern, the market should break out downward, passing the support level. This presents opportunities for a new bearish position, or might be a sign to close a long one.
For a falling wedge, the price should break through a resistance level to start an uptrend. You can open a long position at this point, or close a short one.
Candlestick in Trading
A Candlestick in forex trading is a charting tool that shows how the price of a currency pair moves within a specific time period (for example, 1 minute, 1 hour, 1 day, etc.). It visually represents market sentiment — whether buyers (bulls) or sellers (bears) were in control during that time.
How to Read a Candlestick Chart
One of the fundamental understandings necessary to learning technical analysis is reading candlestick charts. If you have never studied technical analysis, chances are you have only used a line chart. Line charts only provide one data point, the closing price of a stock, but candlestick charts provide five: open, close, low of day (LOD), high of day (HOD), and direction of movement.Each candle can represent anywhere from 1 minute to 1 year depending on the settings. Longer time frame charts are more likely to provide reliable long-term trends.
Bullish Candles
Doji
At its heart, a Doji (pronounced “doh-jee”) is a candlestick pattern that signals indecision in the market. It represents a tug-of-war between buyers and sellers where neither side can gain control, and the session ends in a virtual stalemate.
Hammer
A hammer is a single candlestick pattern that appears at the bottom of a downtrend and often signals a potential reversal to the upside. It has a small real body near the top of the candle, a long lower shadow (at least twice the length of the body), and little to no upper shadow.
Inverted Hammer
An inverted hammer is a single candlestick pattern that appears at the bottom of a downtrend and signals a potential bullish reversal. It looks like an upside-down hammer — with a small real body near the lower end of the candle, a long upper shadow, and little to no lower shadow.
Bullish Engulfing
A bullish engulfing pattern is a strong two-candle reversal pattern that appears at the bottom of a downtrend and signals a potential shift from bearish to bullish momentum.
Piercing Line
A Piercing Line pattern is a two-candle bullish reversal pattern that appears at the bottom of a downtrend. It signals that selling pressure is weakening and buyers are beginning to take control
Morning Star
A Morning Star is a powerful three-candle bullish reversal pattern that appears at the bottom of a downtrend and signals the beginning of a potential upward movement.
The first candle is a long bearish candle that confirms the ongoing downtrend and strong selling pressure. The second candle is a small-bodied one — it can be bullish, bearish, or even a doji — showing indecision in the market as selling starts to weaken and buying interest slowly appears. The third candle is a strong bullish candle that closes well into the body of the first bearish candle, confirming that buyers have regained control.
Three White Soldiers
The Three White Soldiers pattern is a strong bullish reversal pattern that appears after a downtrend and signals a clear shift from bearish to bullish market sentiment.
It consists of three consecutive long bullish candles, each opening within or near the previous candle’s body and closing progressively higher. All three candles usually have small or no upper shadows, showing that buyers maintained strong control throughout the sessions.
Bullish Harami
A Bullish Harami is a two-candle pattern that appears during a downtrend and signals a potential reversal to the upside. The word “Harami” means “pregnant” in Japanese, which describes how the pattern looks — a small candle contained within the body of a larger one.
In this pattern, the first candle is a long bearish (red or black) candle that continues the downtrend. The second candle is a small bullish (green or white) candle that forms completely within the body of the first candle — meaning its open and close are both inside the range of the previous candle’s body.
Tweezer Bottom
A Tweezer Bottom is a bullish reversal pattern that appears at the end of a downtrend, signaling that selling pressure is weakening and buyers may soon take control. It usually consists of two candles — both having almost the same low price, which shows strong support at that level.
Tweezer Bottom tells traders that the market has found a strong floor, and a bullish reversal is likely to follow.
Rising Three Methods
The Rising Three Methods is a bullish continuation candlestick pattern that appears during an uptrend. It shows a temporary pause or consolidation before the market resumes its upward movement.
The pattern typically consists of five candles. The first candle is a strong bullish (green or white) candle that confirms the ongoing uptrend.
This pattern reflects a healthy market behavior — a short rest before the next bullish wave.
Bearish Candles
Bearish Marubozu Candlestick Pattern
Definition: The Bearish Marubozu Candlestick Pattern is a long, dark candle with no wicks, indicating that the market opened at its high and closed at its low, reflecting strong selling pressure throughout the period.
Signal: Indicates a continuation of the current downtrend.
Trend: Suggests a strong bearish sentiment.
Hanging Man
A Hanging Man is a bearish reversal candlestick pattern that appears at the top of an uptrend, signaling that the bullish momentum may be weakening and a potential downtrend could begin.
It looks exactly like a hammer, but its position in the trend makes it bearish instead of bullish. The candle has a small real body near the top, a long lower shadow (at least twice the length of the body), and little or no upper shadow.
Shooting Star
A Shooting Star is a bearish reversal candlestick pattern that forms at the top of an uptrend, indicating that the bullish momentum is fading and sellers may soon take control.
This sharp rejection of higher prices signals weakness among buyers and a potential shift in market sentiment from bullish to bearish.
Bearish Engulfing
A Shooting Star is a bearish reversal candlestick pattern that forms at the top of an uptrend, indicating that the bullish momentum is fading and sellers may soon take control.
This sharp rejection of higher prices signals weakness among buyers and a potential shift in market sentiment from bullish to bearish.
Dark Cloud Cover
A Dark Cloud Cover is a bearish reversal candlestick pattern that appears at the top of an uptrend, indicating that the bullish momentum is weakening and sellers may be preparing to take control.
This shift shows that buyers initially tried to push prices higher at the open, but sellers quickly entered the market and drove prices down significantly, erasing much of the previous day’s gains. The deeper the second candle closes into the first candle’s body, the stronger the bearish signal.
Evening Star
A Dark Cloud Cover is a bearish reversal candlestick pattern that appears at the top of an uptrend, indicating that the bullish momentum is weakening and sellers may be preparing to take control.
This shift shows that buyers initially tried to push prices higher at the open, but sellers quickly entered the market and drove prices down significantly, erasing much of the previous day’s gains. The deeper the second candle closes into the first candle’s body, the stronger the bearish signal.
Three Black Crows
The Three Black Crows is a strong bearish reversal candlestick pattern that appears at the top of an uptrend, signaling a clear shift from bullish to bearish momentum.
This pattern becomes more reliable when it forms after a strong rally or near a resistance level, and when accompanied by high trading volume. It warns traders that the uptrend has likely ended and a downtrend or correction is beginning.
Bearish Harami
A Bearish Harami is a two-candle bearish reversal pattern that appears at the top of an uptrend, signaling that the strong bullish momentum may be weakening and a potential downtrend could follow.
The Bearish Harami becomes more reliable when it appears near a resistance zone or after a prolonged rally. The signal is confirmed if the next candle closes bearish and below the Harami’s small candle, showing that sellers are gaining control and a downward move is likely to begin.
Tweezer Top
A Tweezer Top is a bearish reversal candlestick pattern that forms at the top of an uptrend, signaling that the bullish momentum is losing strength and sellers may soon take control.
The Tweezer Top becomes more reliable when it appears after a long rally, near a known resistance zone, or when the second candle closes lower with strong bearish confirmation. In short, it marks the point where bullish strength fades and a potential downward reversal begins.
Falling Three Methods
A Tweezer Top is a bearish reversal candlestick pattern that forms at the top of an uptrend, signaling that the bullish momentum is losing strength and sellers may soon take control.
The Tweezer Top becomes more reliable when it appears after a long rally, near a known resistance zone, or when the second candle closes lower with strong bearish confirmation. In short, it marks the point where bullish strength fades and a potential downward reversal begins.
Candlesticks Sheet
