How to Read Reversal Patterns for New Traders

The common reversal patterns used to trade xauusd that beginner trade transactions should know are explained below.

Reversal Setups

The commonly used reversal patterns are:

Double Tops Reversal Chart Pattern

Double tops pattern is an M shaped two tops or 2 peaks pattern setup which forms on the price chart during a upward trend.

Double tops pattern is a bearish xauusd pattern that forms when price reaches a resistance zone.

The price will move upward & then dip slightly then turn up & move up to the top level where it had reached or slightly below this level then move downward again forming what's known as a double top chart setup.

Double Bottoms Reversal Pattern

Double bottoms chart setup is a W shaped two bottoms or two lows pattern setup which forms on the price chart during a downward trend.

Double bottoms chart setup is a bullish xauusd pattern that forms when price reaches a support level.

The price will move downward in then move upwards slightly then turn downward and move downward to the bottom level where it had reached or slightly above this level then move upwards again forming what's known as a double bottoms chart setup.

Head & Shoulders Reversal Pattern

Head and Shoulders pattern is a bearish reversal setup that forms after a upward trend.

There's an initial peak which is the first shoulder then a slight dip in the price, then a second higher peak that's the head then another price dip followed by last peak in price that is the second shoulder.

The lowest points between the two price lows forms the neckline and the reversal signal from this head and shoulders reversal setup is confirmed once price moves below this neckline.

Reverse Head & Shoulders Reversal Chart Pattern

Reverse Head & Shoulders chart set-up is a bullish reversal pattern that forms after a downward trend.

There is an initial dip which's the first inverse shoulder then a slight peak in price, then a second lower dip which is the reverse head & then another price peak followed by last price dip in price that's the second inverse shoulder.

The highest points between the two price peaks forms the neck line & the reversal signal from this reverse head and shoulders setup is confirmed once price moves above this neckline.

How Do I Read Reversal Patterns for New Traders

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