3 CHART PATTERNSCHEAT SHEETYou already know my three favorite chart patterns and why I use them. Visithttp://dailypriceaction.com/free-forex-trading-lessons/3-forex-chart-patterns-you-need-to-know to see them all.

But sifting through a 2,000-word lesson for actionable information can be achallenge. Also, knowing which patterns I trade is great, but knowing how I tradethem is far more beneficial.

Well, you’re in luck because I’ve put together this cheatsheet that will show you exactly how I trade all three priceformations including how I determine profit targets andstop loss levels.

1 HEAD AND SHOULDERS PATTERN (AND INVERSE)

Key Characteristics

The head must be higher than both shoulders (or lower for the inverse headand shoulders)Shoulders must be on the same horizontal plane

Entry Rules

Wait for a close below the neckline (4-hour or daily)Look to enter short on a retest of the neckline as new resistance

Head and shoulders Inverse head and shoulders

1

Head and shoulders entry Inverse head and shoulders entry

Stop Loss Placement

Stop loss goes above the candle that broke the neckline (below the candlefor an inverse head and shoulders)

Or...

Above the last minor swing high (below the last minor swing low for theinverse head and shoulders)

Inverse head and shouldersstop loss

Head and shoulders stop loss

Setting Profit Targets

Visit http://dailypriceaction.com/free-forex-trading-lessons/determine-profit-targets-like-pro-using-measured-objectives to find out how to set your profittargets.

2 WEDGE PATTERN2

Must have at least three toucheson both support and resistanceShould form on the 4-hour timeframe or higher for best results

Key Characteristics

Entry Rules

Wait for a close above or below resistance or support respectivelyIf it breaks to the upside, buy on a retest of former resistanceIf it breaks to the downside, sell on a retest of former support

Bullish Entry Bearish Entry

Stop Loss Placement

Stop loss goes above or below the candle that broke the wedge

Or...

Above or below the last minor swing high or swing low respectively

Bearish Stop LossBullish Stop Loss

Setting Profit Targets

Visit http://dailypriceaction.com/free-forex-trading-lessons/determine-profit-targets-like-pro-using-measured-objectives to find out how to set your profittargets.

3 BULL AND BEAR FLAG3

Support and resistance must be parallelThe size of the flag should not be larger than the flag pole

Key Characteristics

Bull Flag Pattern Bear Flag Pattern

Wait for a close above or below resistance or support respectivelyIf it breaks to the upside, buy on a retest of former resistanceIf it breaks to the downside, sell on a retest of former support

Entry Rules

Bear Flag EntryBull Flag Entry

Stop Loss Placement

Bear Flag Stop LossBull Flag Stop Loss

Stop loss goes above or below the candle that broke support or resistancerespectively

Setting Profit Targets

Visit http://dailypriceaction.com/free-forex-trading-lessons/determine-profit-targets-like-pro-using-measured-objectives to find out how to set your profit targets.