A visual reference for common forex chart patterns. Use the pattern, market structure, support and resistance, breakout confirmation, and risk management together. A pattern alone is not a trade signal.
Patterns describe structure. Confirmation and context matter.
Use structure to validate the pattern.
Classical chart patterns describe repeated price structures. Smart Money Concepts adds another layer by examining swing structure, liquidity, displacement, and reaction zones. These ideas can be used as context rather than as automatic entry signals.
Track higher highs and higher lows in an uptrend, or lower highs and lower lows in a downtrend. A meaningful structure break can change the context.
Previous highs, lows, equal highs, equal lows, and obvious range edges can attract orders. A sweep should be confirmed rather than assumed.
A strong directional move can show increased participation and can help distinguish a decisive break from a weak probe through a level.
Some traders mark the final opposing candle before a strong displacement as a potential reaction area. Treat the zone as context, not certainty.
| Structure | What to observe | Pattern confirmation | Invalidation |
|---|---|---|---|
| Break of Structure | A prior swing high or low is broken with a meaningful move. | Break aligns with the direction of the pattern. | Price reclaims the broken structure and invalidates the premise. |
| Liquidity Sweep | Price trades through an obvious high or low and then reacts. | Look for rejection and follow-through rather than the sweep alone. | Price accepts beyond the swept level and continues through it. |
| Displacement | A fast directional move creates a clear imbalance in price action. | Breakout has stronger follow-through than nearby swings. | Breakout immediately fails and returns into the prior structure. |
| Retest | Price returns to the broken level or zone. | Former resistance can act as support, or former support as resistance. | Price moves decisively back through the level. |
A repeatable process for studying any setup.
Mark the visible swings, boundaries, support, resistance, and the pattern's defining features.
Check the higher timeframe, current trend, session conditions, nearby liquidity, and major levels.
Wait for the required breakout, close, rejection, displacement, or retest described by your plan.
Define the invalidation level, position size, stop, target, and maximum acceptable loss before entry.
A pattern remains a hypothesis until price confirms it. Define what would prove the setup wrong before entering. Position size should be calculated from the distance to invalidation and the amount of account equity you have chosen to risk. A measured target is a planning reference, not a guarantee that price will reach it.
Structure first. Entry second.