Do chart patterns in the Forex market work?
This is the most asked question I receive, probably because I wrote a book review on the Forex market. The question is a good one but I do not know the answer. I do not trade the Forex market and don’t think I can even get quotes from my broker on it. The reports from other traders that ply the Forex market suggests that technical analysis is well suited to Forex because it tends to trend. Chart patterns appear and can be used as buy and sell signals. However, false breakouts from both chart patterns and congestion regions are common, as in any market. Thus, you need to take care when using any trading technique. I have read that Fibonacci retracement levels and extensions work especially well, so bone up on those subjects. Look into moving averages, oscillators, candlesticks, and Bollinger bands. All of those indicators tell a story and once you know how to read the book, the message becomes clear. And I don’t know if candlesticks work better or worse in the Forex market, either.
