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Forex chart patterns, which include the head and shoulders as well as triangles, provide entries, stops and profit targets in a pattern that can be easily seen. The engulfing candlestick pattern provides insight into trend reversal and potential participation in that trend with a defined entry and stop level. Chart Patterns are a technical tool that packs data for multiple time frames into single pattern. This makes them more useful than traditional open, high, low, close (OHLC) bars or simple lines that connect the dots of closing prices. Candlesticks build chart patterns that may predict price direction once completed. Proper color coding adds depth to this colorful technical tool, which dates back to 18th century Japanese rice traders.
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