Multiple Forex Trading Wave Patterns

Posted April 21st, 2010 by Rapid Forex 16 Comments »

In my previous post, you learned about the single price movement for online forex trading, fibonacci waves. This post is the continuation of my previous posts on the Forex Sailing trading method. Please go back to the Forex Sailing Introduction to begin learning how to use this style of forex trading.

On a small scale, forex trading prices move in a single fibonacci wave. If the price is going to continue in an uptrend, there will be several forex candy-canes moving up. For a downtrend, several forex umbrella-handles will link together to form the downtrend.

Double Forex Trading Price Waves

Online forex trading fibonacci waves happen in a few wave configurations. Although single wave patterns are common, the double wave pattern is the most common of the multiple wave patterns. The double fibonacci wave is simply two fibonacci waves in a row:

Triple Forex Trading Price Waves

Triple fibonacci waves are also common in online forex trading. Instead of two waves combining to form an uptrend or downtrend, three waves combine to form a fibonacci wave pattern:

Multiple Forex Trading Waves

Occasionally more than 3 fibonacci waves will combine into a 4 or 5 wave pattern. For our purposes, we’ll consider multiple wave patterns too rare for online forex trading. Since these wave patterns are rare, we can’t expect more than 3 waves before the trend ends. When forex trading, get off after the third wave. It’s too risky to stay on after the third wave!

Trading Forex Sailing Waves

In the upcoming Forex Sailing video webinar, I’ll show you exactly how to use this concept for Forex Sailing. Before getting technical with numbers and rules, understand what we’re trying to do.

The SINGLE FACT of Forex Trading

So far, I’VE SHARED A VERY IMPORTANT FACT WITH YOU:

FACT: Forex prices move in 1, 2 or 3 wave patterns

This is the one simple fact that you’ll be using to become an expert at online forex trading. Everything else we do with forex trading is just an application of this FACT. Memorize this FACT because all you need to do is get good at this one FACT and you’ll become a skilled forex trading genius!

Beginning of a New Trend

A common question that I’ve had for years from forex traders is:

Question: How do you know when a trend is over and a new one has begun?

Answer: Wait for a single fibonacci wave to form AFTER:

A trendline break
A Japanese Candlestick Reversal Pattern – (see more candle reversal patterns here).
A Double-bottom, Double-top or a head & shoulders pattern.
A consolidation pattern such as a triangle or a channel (check out the free trial of this software).
ANY technical indicator signals that you like to use (Moving Average Crossovers, MACD signals, Stochastics, etc…) You can also pick your favorite
An automated forex trading robot (yes, they can be useful if you use them to provide trading signals, not to trade for you)

You can use ANY of the signals above (there are more that I haven’t covered).

Here’s how to use our FACT above:

AFTER a trend reversal signal (or consolidation breakout), wait for a fibonacci wave to form. You now have the beginning of a new trend that you can ride for a 2nd or a 3rd wave.

What To Do NOW

Open up your forex trading account & look at your forex charts:

Use candlestick charts
Look at several different currency pairs
Look at several different timeframes
Look for TWO & THREE Wave patterns (like in the images below)

Tags: 2 wave patterns, 3 wave patterns, fibonacci waves, forex sailing, online forex trading Posted in Forex Sailing

16 Responses to “Multiple Forex Trading Wave Patterns”

Kulvadee Says:
April 21st, 2010 at 3:44 pm
Wow, you explained very clearly. Now I need to practice and look at charts to try to put all things together.
Thanks so much, Brian.

[Reply]
Mike Pachuta Says:
April 21st, 2010 at 4:50 pm
A couples days ago you said the trend was changing to an up trend OOOOPs

I changed my direction with your suggestion Look like it’s not really ready to go long sigh lol

[Reply]
Rapid Forex Reply:
April 21st, 2010 at 4:51 pm
@Mike – That analysis was only one of three things that we should be looking at for a trade. To do a 4-hour trade, we want to look at:

1. Daily charts
2. 4-hour Charts
3. Hourly charts

Of course this hasn’t been fully explained yet as I am currently teaching it. You’re right that the price continued down. I didn’t do a trade because the 4-hour and hourly charts didn’t line up. Now it looks like it’s in a consolidation, so I won’t be entering trades until it breaks out.

Another important thing to remember is that I’m wrong 50% of the time. With Forex Sailing, as long as you’re right more than 35-40%% of the time, you’ll still be profitable. This should all make more sense once Forex Sailing is completed and we can look at charts for opportunities virtually every day during the 90 day bootcamp.

[Reply]
Maks Says:
April 21st, 2010 at 7:11 pm
Brian,
I have had many lost trades, because I have enterd after second wave, when doeing forex surfing on 10 min candles while trend in my opinion was just at the begining – I was surprised when trend just hit me. Thank you for your simple explanation, It helps me a lot!
Maks

[Reply]
Maks Says:
April 21st, 2010 at 7:34 pm
Thank you for your explanation when new trand is started. Now I know exactly ) One question, is new fibonacci wave formed when vawe retrace to 61.8 and there is some double bottom or candle formation there or when it comes back and higher than 100%. I think last one, but I just have to ask you to be sure, that I understand correctly.
Thank you again,
Maks

[Reply]
Rapid Forex Reply:
April 21st, 2010 at 7:35 pm
@Maks – the new wave is formed when it retraces to 61.8% after some type of reversal signal (or consolidation breakout). We don’t get in at that moment however, we want to “zoom-in” to a lower timeframe (for 4-hour charts, look at hourly). We want to make sure we’re in a wave pattern that agrees with our 4-hour chart direction. When we do this, we basically have an alignment of the daily, 4-hour, and hourly chart. This is a pretty strong trend to ride!

[Reply]
Mark Williams Says:
April 21st, 2010 at 8:44 pm
Thanks for sharing this. I looked at my charts & can see waves happening. I also see cases where the waves fail. I trust that you’ll be sharing those cases with us as you’ve mentioned that “nothing will be left out.”

Mark

[Reply]
Rapid Forex Reply:
April 21st, 2010 at 8:45 pm
@Mark – yes, there are times when you need to get off a wave because they can crash. I’ll be charing those signs as part of the Forex Sailing course

[Reply]
Kyle Says:
April 22nd, 2010 at 8:10 am
Hi Brian,
I believe from older posts that you trade on the 4hr chart. So do you use a smaller time frame to do the inner and outer trendlines on and then use the 4hr timeframe for the long term trendlines and actually trade off the 4hr?

I assume you can still see the shorter timeframe trendlines on the 4h chart?

Kyle

[Reply]
Rapid Forex Reply:
April 22nd, 2010 at 8:11 am
@Kyle – When I find a trade that I want to do on 4-hour charts, I zoom in to hourly charts to look for a time to jump on the wave. It’ll be taught in the remaining lessons of Forex Sailing.

[Reply]
Kulvadee Says:
April 22nd, 2010 at 11:55 am
Hi Brian
As a beginner, do you think I should practice on smaller timeframes to see more price action? if yes, what timeframes do you recommend to replace Daily, 4hr and 1hr chart?

[Reply]
Rapid Forex Reply:
April 22nd, 2010 at 12:11 pm
@Kulvadee – No! As a beginner you should start with the larger timeframes. The pace is different with the smaller timeframes. It’s important to learn to go slow before going fast. Most people will incorrectly tell you to start with smaller timeframes, but this pace is too fast for the beginner who isn’t clear on what to do yet. The larger timeframes allow you “time to think” about what you’re doing as you learn.

Smaller timeframes are what I call “Forex Surfing” and will be taught after we have some “Forex Sailing” time

[Reply]
Kulvadee Says:
April 22nd, 2010 at 1:10 pm
Thanks, Brian. This makes a lot more sense to me.
I looked at 5min, 15min chart and made me scared and thought how could I jump on board. It seems everyone in hurry and that may get accident easily.:)
So I prefer to surf slowly but sure.
I like your idea that spend less time on the computer but can make tons of pips. Can you please tell me what time of the day I should look at charts to find the opportunity to get on board?

[Reply]
Karl T Says:
April 24th, 2010 at 8:32 am
Looking at various time frames I note that waves do not always retrace to the 61.8% level that has been identified. After more reading I note that other Fibonaci ratios can also apply – e.g. 38.2, 50 78.6. I assume that a 61.8% wave (if I can be allowed to charactize a wave that way) is not a hard rule but just an average wave or wave more often encountered than others?

[Reply]
Rapid Forex Reply:
April 24th, 2010 at 8:33 am
@Karl – You’re absolutely right! The 61.8% is not always going to happen. I’ll be sharing rules for what to do in every scenario. But for learning purposes, let’s just assume 61.8% until we have ways to deal with what happens when it doesn’t do what we want it to.

[Reply]
Carrie Weber Says:
January 13th, 2012 at 3:26 am
Loving this post. learned somethings I did not know!

thank you!

[Reply]

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