2B Pattern Forex Strategy

Described by Victor Sperandio in his book Trade Vic, Method of a Wall Street Master, the 2B pattern is a reversal forex pattern. In this guide, we’ll mention what the pattern is all about and how you can trade it.

What is the 2B Pattern?

The 2B pattern identifies market reversals at tops and bottoms. The idea behind the pattern is the price retraces to the previous trend after excessive highs and lows.

Sperandio mentioned that if the first high is below the second one in an uptrend, we can expect a price reversal. Conversely, if the first low is above the second one in a downtrend, we can anticipate a bullish reversal.

The pattern explains the bullish and bearish excessiveness. For instance, when the market makes a high and then makes another high but is higher than the previous one, it means there is bullish excessiveness, similar to what we see on the RSI as an overbought condition.

If you are familiar with the double top and bottom chart pattern, then the 2B forex pattern looks similar to the double top and double bottom.

2B Pattern
2B Pattern

2B Pattern Forex Strategy

Trading with the 2B chart pattern is easier than other patterns like the Wedge or Ascending/Descending triangle patterns.

If the price makes two bottoms in a downtrend, and the second bottom is lower than the first one, you can mark a potential long entry point. Conversely, if the price makes two tops, and the second one is above the first one, it’s a sign of a bearish reversal, and you can take short positions.

You can add indicators like the RSI and Stochastic to confirm the reversal.

Consider locating at a longer timeframe when looking for the 2B pattern, as the pattern may be prone to false signals in a shorter timeframe.

Buy Signal

  • There must be a downtrend.
  • The second bottom should be lower than the first one.
  • Wait for the price to go upwards or confirm the reversal with any other indicator.
  • Place a stop-loss at the second bottom.
  • Set take-profit at the recent high.
2B Pattern Forex buy signal
2B Pattern Forex buy signal

Sell Signal

  • There must be an uptrend
  • The second top should be higher than the first one.
  • Wait for the price to go downwards or confirm the reversal with any other indicator.
  • Place a stop-loss at the second top.
  • Set take-profit at the recent low.
2B Pattern Forex sell signal
2B Pattern Forex sell signal

2B Pattern Forex Pros & Cons

Many chat patterns are reliable; however, you can rely specifically on them. Here are the pros and cons of the 2B pattern.

Pros

  • The pattern is easy to identify and occurs frequently.
  • It presents tighter stop-losses.

Cons

  • The pattern isn’t for shorter timeframes.
  • You may need to apply other indicators for further signal

Conclusion

The 2B pattern forex tells about the theory that when the market makes highs and lows, it has to return to the previous trend, even if it is for some time. The pattern is easy to identify and looks similar to the double top and bottom. As with any forex strategy, you should have excellent money management so that one bad trade does not cancel out a consecutive run of winners.  You can always practice trading on a forex demo account to begin with to improve your trading skills and build up your confidence.

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