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Home » Railway Tracks Chart Pattern Forex Trading Strategy| Simple Price Action Forex Strategy

Railway Tracks Chart Pattern Forex Trading Strategy| Simple Price Action Forex Strategy

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For a reversal trading setup, consider the Railway Track Candlestick Pattern. This pattern shows a reversal of sentiment in the currency pair. It consists of two candles with roughly the same opening or closing price. One candle’s body will at times engulf the other, which suggests a strong change of direction.
Railway Track Candlestick Pattern

By recognizing this pattern, you can anticipate potential shifts in price action. Understanding how to spot and interpret this pattern can improve your trading strategies.  Like all chart patterns, having a hard stance on what the pattern should look like may diminish the amount of trading opportunities.  When trading, think of “close is close enough”. 

You are not trading the price pattern.  You are trading what makes the pattern happen.

What is the Railway Track Candlestick Pattern?
What is the Railway Track Candlestick Pattern

The Railway Track Candlestick Pattern consists of two candles, one bullish and one bearish, serving as indicators of potential trend reversals. In price action trading, these candlestick patterns are known as trend reversal patterns. The bullish railway track pattern suggests a potential bullish market trend, while the bearish railway track pattern indicates a possible bearish trend.

These patterns are simple yet effective, commonly observed at the end of trends or significant price swings. Traders often spot them on various currency pairs and higher time frames like daily, 4-hour, and 1-hour charts.

When you find the bullish railway track pattern, it could signal a shift towards a bullish market sentiment, prompting traders to think about entering long positions.

The bearish railway track pattern might indicate an impending bearish move, leading traders to think about short positions.

How to Trade the Railway Track Pattern

To trade the Railway Track Pattern, consider using buy-stop orders above the high for bullish patterns and sell-stop orders below the low for bearish patterns. This strategy allows you to enter the market at favorable points during trend reversals as the price moves in your direction.
How to Trade the Railway Track Pattern

Using proper risk management is as simple as placing stop-loss orders above the high for bearish patterns and below the low for bullish patterns.  If these trades are going to work, they should work without breaching the high/low of the setup.

For profit targets, aim for a risk-reward ratio of 1:3 or target previous swing highs/lows.  While 1:3 is a rule of thumb, I have great success with 1:1 and 1:2.  The chances of you hitting your 1:1 target are high.  Many traders will use a 1:1, peel-off part position, and then trail a stop loss to maximize gains.

Advantages of Trading Railway Tracks

By adding railway track candlestick patterns into your trading strategy, you gain an edge through favorable risk-reward ratios and early trend entry opportunities. Here are some advantages of trading railway tracks:

  1. Improved Risk-Reward Ratio: Railway track candlestick patterns offer a good risk-reward ratio, allowing you to potentially earn more while risking less on your trades.
  2. Early Entry into Trends: Trading railway tracks enables you to spot new trends early on, giving you the advantage of entering the market at key points for potential profit maximization.
  3. Utilization of Key Chart Levels: By properly analyzing railway tracks, you can effectively utilize key chart levels to make informed trading decisions and enhance your overall profitability.

Disadvantages and Risks

Recognizing the limitations and hazards associated with trading railway track candlestick patterns is important as not all candlestick patterns are tradable in all market conditions.

Spikes in price action can unexpectedly trigger stop losses, leading to unexpected losses. Exercise caution and selectivity when identifying and trading these patterns to avoid falling victim to stop hunts.

Market volatility plays a significant role in the success of railway track pattern trades, as sudden price movements can disrupt your trading strategy. Being prepared for unexpected movements is vital in trading and you need a plan to address it.

Adapt to changing market conditions to mitigate risks associated with trading railway track candlestick patterns.

Combining with Other Technical Analysis

Consider combining railway track candlestick patterns with other technical analysis tools to enhance your trading strategy and improve decision-making. When integrating these two candlestick patterns with Bollinger Bands, you can gain valuable insights into market movements.

Here’s how you can benefit from this combination:

  1. Confirmation of Exhaustion Moves: By observing the railway track candlestick patterns alongside Keltner Channels, you can verify the exhaustion of bearish forces in the market. This confirmation can help you anticipate potential trend reversals accurately.
  2. Enhanced Analytical Significance: The combination of these tools indicates the market’s struggle to break a dynamic trading range. This enhanced analytical significance provides a clearer picture of the market sentiment, aiding in decision-making processes.
  3. Utilizing Fib Extensions for Confirmation: Traders can use Fib extensions to calculate the endpoint and confirm the pattern is close to 1.272 / 1.618.

Frequently Asked Questions

What Is the Bearish Railroad Track Pattern?

When you see the bearish railroad track pattern, it signals a potential shift to bearish sentiment in forex trading. It consists of a bullish candle followed by a bearish one, often found at resistance levels.

What Is the Railroad Pattern Trading?

When trading the railroad pattern, you’ll analyze two candlesticks signaling potential trend reversals. Place a buy-stop order above the high for bullish signals and sell-stop orders below the low for bearish ones, managing risk carefully.

What Is a Railroad Track Forex?

In forex, a railroad track pattern consists of two candles indicating possible trend reversals. It helps you spot entry and exit points for trading, offering potential profit opportunities. Understanding this pattern is essential for successful trading strategies.

What Is the Candlestick Formation Pattern Strategy?

When trading candlestick formation patterns, you analyze price action to spot potential trend reversals. Place buy/sell stop orders above/below candlestick highs/lows for entry. Manage risk with stop losses and aim for favorable risk-reward ratios to trade effectively.


To wrap up, mastering the Railway Tracks pattern in forex trading can give you a competitive edge by helping you identify potential trend reversals effectively. By understanding how to trade this powerful price action strategy, you can enter trends early with defined risk management levels.

While there are advantages to using this pattern, it’s important to stay vigilant against false signals and market volatility. Combining the Railway Tracks pattern with other technical analysis tools can further improve your trading skills with this high-probability trading pattern.