Bullish & Bearish Divergence Pattern

Divergence is a term which often comes back in forex technical analysis, it occurs when the price of the underlying currency pair and the indicator move in opposite directions. A bullish divergence can predict future upturns, while a bearish divergence can predict future downturns. Currency traders make trading decisions by identifying situations of divergence, where the price of a currency pair and indicators, such as the MACD, are moving in opposite directions. Bullish Divergence  Bullish divergence occurs when the price of the underlying currency pair makes a new low while the indicator fails to make a new low or heading higher suggesting the downtrend may be nearly over. When identifying bullish divergences, a currency trader will look for BUYING opportunities. Bearish Divergence  Bearish divergence occurs when the price of the underlying currency pair makes a new high while the indicator fails to make a new high or heading lower suggesting the up trend may be nearly over. When identifying bearish divergences, a currency trader will look for SELLING opportunities.

Forex Symmetrical Triangle Chart Pattern

This pattern shows two converging trendlines (support levels & resistance levels) and is (1) a bearisch formation that usually forms during a currency pair downtrend as a continuation pattern (downtrend will continue) or (2) a bullish formation that usually forms during a currency pair uptrend as a continuation pattern. (uptrend will continue) This pattern is confirmed when the currency pair price breaks out of the symmetrical triangle formation (1) to the downside and closes below the lower support trendline in order to continue the downtrend or (2) to the upside and closes above the upper resistance trendline in order to continue the uptrend. What does a Symmetrical Triangle Formation look like?  The symmetrical triangle is marked by two important trend lines. At its top, there is a line of resistance where traders are willing to sell the currency pair. This resistance line communicates the fact that bearish currency traders are over time willing to pay lower and lower prices for the currency pair indicating a possible break out to the downside. At it's bottom, the support line communicates the fact that bullish currency traders are over time willing to pay higher and higher prices for the currency pair indicating a possible break out to the upside. How to trade this pattern?  For it's best prediction, an established trend should exist, either a strong down or a strong uptrend. Once the currency pair breaks out the symmetrical triangle, most likely, the price will continue it's previous trend. Trade the breakout! Chart example USD/JPY 4 Hour Chart Symmetrical Triangle continuation pattern. Please note how the previous trend is an uptrend, once it breaks out the symmetrical triangle, it's uptrend continue!

Forex Descending Triangle Chart Pattern

This pattern is similar tho the ascending triangle chart pattern but reverse, it shows two converging trendlines (support levels & resistance levels) and is a bearisch formation that usually forms during a currency pair downtrend as a continuation pattern (downtrend will continue). This pattern is confirmed when the currency pair price breaks out of the descending triangle formation to the downside and closes below the lower support trendline. However, when the currency pair price breaks out to the upside, the descending triangle now is a reversal pattern. What does a Descending Triangle Formation look like?  The descending triangle is marked by two important trend lines. At its top, there is a line of resistance where traders are willing to sell the currency pair. This resistance line communicates the fact that bearish currency traders are over time willing to pay lower and lower prices for the currency pair indicating a break out to the downside. At it's bottom, we notice the support trend line where forex traders are willing to buy the currency pair. How to trade this pattern?  Sell the currency pair when price breaks out of the descending triangle formation to the downside and closes below the lower support trendline. Chart example GBP/USD 1 Hour Chart Ascending Triangle continuation pattern.

Forex Ascending Triangle Chart Pattern

The ascending triangle chart pattern shows two converging trendlines (support levels & resistance levels) and is a bullish formation that usually forms during a currency pair uptrend as a continuation pattern. This pattern is confirmed when the currency pair price breaks out of the ascending triangle formation to the upside and closes above the upper resistance trendline. However, when the currency pair breaks out to the downside, the ascending triangle now is a reversal pattern. What does an Ascending Triangle Formation look like?  The ascending triangle is marked by two important trend lines. At its top, there is a line of resistance where traders are selling the currency pair. At it's bottom, we notice the rising support trend line where forex traders are willing to buy the currency pair. This support line communicates the fact that bullish currency traders are over time willing to pay higher and higher prices for the currency pair indicating a break out to the upside. How to trade this pattern?  Buy the currency pair when price breaks out of the ascending triangle formation to the upside and closes above the upper resistance trendline. Chart example GBP/USD 15 Min Chart Ascending Triangle continuation pattern.