In this educational articles, I will teach you the best price action patterns for Trend-Following Trading.
๐Ascending & Descending Triangles
The ascending triangle will be considered to be a trend-following pattern if the impulse leg preceding the formation of the pattern is bullish.
The pattern consist of 2 main elements:
a horizontal neckline based on the equal highs,
a rising trend line based on the higher lows.
โ๏ธThe trigger is a bullish breakout of a neckline of the pattern and candle close above.
๐The position is opened on a retest.
๐ดStop loss is lying at least below the level of the last higher low.
๐ฏTake profit is the next historical resistance.
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๐The descending triangle will be considered to be a trend-following pattern if the impulse leg preceding the formation of the pattern is bearish.
The pattern consist of 2 main elements:
a horizontal neckline based on the equal lows,
a falling trend line based on the lower highs.
โ๏ธThe trigger is a bearish breakout of a neckline of the pattern and candle close below.
๐The position is opened on a retest.
๐ดStop loss is lying at least above the level of the last lower high.
๐ฏTake profit is the next historical support.
๐Bullish & Bearish Wedges
The bullish wedge pattern will be considered to be a trend-following pattern if the impulse leg preceding the formation of the pattern is bullish and the pattern is directed to the downside.
The pattern consist of 2 contracting falling trend lines based on the lower lows and lower highs.
โ๏ธThe trigger is a bullish breakout of a resistance of the pattern and candle close above.
๐The position is opened on a retest.
๐ดStop loss is lying below the low of the pattern.
๐ฏTake profit is the high of the pattern.
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The bearish wedge pattern will be considered to be a trend-following pattern if the impulse leg preceding the formation of the pattern is bearish and the pattern is directed to the upside.
The pattern consist of 2 contracting rising trend lines based on the higher highs and higher lows.
โ๏ธThe trigger is a bearish breakout of a support of the pattern and candle close below.
๐The position is opened on a retest.
๐ดStop loss is lying above the high of the pattern.
๐ฏTake profit is the low of the pattern.
๐Bullish & Bearish Flags
The bullish flag pattern will be considered to be a trend-following pattern if the impulse leg preceding the formation of the pattern is bullish and the pattern is directed to the downside.
The pattern consist of 2 parallel falling trend lines based on the lower lows and lower highs.
โ๏ธThe trigger is a bullish breakout of a resistance of the pattern and candle close above.
๐The position is opened on a retest.
๐ดStop loss is lying below the low of the pattern.
๐ฏTake profit is the high of the pattern.
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The bearish flag pattern will be considered to be a trend-following pattern if the impulse leg preceding the formation of the pattern is bearish and the pattern is directed to the upside.
The pattern consist of 2 parallel rising trend lines based on the higher highs and higher lows.
โ๏ธThe trigger is a bearish breakout of a support of the pattern and candle close below.
๐The position is opened on a retest.
๐ดStop loss is lying above the high of the pattern.
๐ฏTake profit is the low of the pattern.
๐Bullish & Bearish Symmetrical Triangles
The bullish symmetrical triangle will be considered to be a trend-following pattern if the impulse leg preceding the formation of the pattern is bullish.
The pattern consist of 2 contracting symmetrical trend lines based on the higher lows and lower highs.
โ๏ธThe trigger is a bullish breakout of a resistance of the pattern and candle close above.
๐The position is opened on a retest.
๐ดStop loss is lying at least below the last higher low of the pattern.
๐ฏTake profit is the high of the pattern.
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The bearish symmetrical triangle will be considered to be a trend-following pattern if the impulse leg preceding the formation of the pattern is bearish.
The pattern consist of 2 contracting symmetrical trend lines based on the higher lows and lower highs.
โ๏ธThe trigger is a bearish breakout of a support of the pattern and candle close below.
๐The position is opened on a retest.
๐ดStop loss is lying at least above the last lower high of the pattern.
๐ฏTake profit is the low of the pattern.
The main difficulty related to trading these patterns is their recognition. You should train your eyes to recognize them on a price chart.
Once you learn to do that, I guarantee you that you will make tons of money trading them.
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