RAILWAY TRACKS CHART PATTERN

Railway Tracks Pattern is a secondary formation (unlike pinbars and inside bars) of Price Action, but no less frequent on the chart of price movement of a certain underlying asset. It occurs mainly during the correction of the main trend movement. That is, it is necessary to catch the pattern on a pullback from the main trend.

✴️ THERE ARE TWO TYPES OF PATTERN
• Bullish pattern is formed in a downward movement and indicates a change from a bearish trend to a bullish trend;
• Bearish pattern is formed in an upward movement and indicates a change from a bullish trend to a bearish trend.

✴️ THE SHAPE OF THE RAILWAY TRACKS PATTERN
The pattern consists of only two candles (bars). The following conditions are necessary for the pattern formation.
Each candlestick should be facing different directions. That is, there must be bearish and bullish candles.
The bodies of the candles should be long and make up at least 70% of the entire length of the candle.

By the way, if you switch to higher timeframe of the chart when the Railway Tracks Pattern is formed, you can find a pinbar, which is also a reversal pattern in the Price Action trading system. For example, on the 15-minute chart of the GOLD a bearish Railway Tracks Pattern was formed, which led to a trend reversal:

And if you look at the 30-minute chart, you can see a pinbar:
These are the nuances of the pattern that can play into the hands of a trader, especially beginners.


✴️ WHAT THE RAILWAY TRACKS PATTERN INDICATES
If we look at the pattern itself, we can realize that the market has changed its mood sharply. At the same time, as a rule, this abrupt change of mood is short-term. The pattern indicates a reversal of the current trend, but that does not mean that it will be long-term. Most often, after the pattern in question, the price moves in the direction opposite to the previous trend, for a short distance, a relatively small range. After a sharp change of mood in the market, as a rule, a flat move follows. In the resulting sideways trend, you can usually recognize the next pattern of trend continuation or reversal.

✴️ HOW TO TRADE RAILWAY TRACKS PATTERN
In order to apply Railway Tracks Pattern in trading, you need to consider only a high-quality pattern. In addition, the signal from the pattern should be confirmed by any of the following technical analysis tools:

• support and resistance levels
• Fibonacci levels
• trend lines or trend channel
• divergence

In addition, the pattern is considered to be of higher quality the longer the bodies of its candlesticks are. It is most profitable to trade it at the end of the correction of the main trend. That is, trading will be conducted in the direction of the main trend. The formation of the pattern is a signal in itself. If there is a confirming factor, it is necessary to enter the trade. For the Forex market, the target price is the nearest potential support or resistance level. The order should be pending in the direction of the potential movement. Stop Loss should be at the level of the opposite extremum the highest point in a bearish setup and the lowest point in a bullish setup.

✴️ BOTTOM LINE
The Railway Tracks Pattern is a reversal formation in indicator-free trading. It serves as a confirming factor about the trend reversal rather than a full-fledged trading signal. Therefore, the pattern must be confirmed by other tools of technical analysis of the chart.