Ross Hook Pattern

Author: The Forex Geek | Published: February 28, 2024

The Ross Hook Pattern is a technical analysis pattern that traders use to identify potential buy or sell opportunities in the financial markets. By analyzing the price action of an asset, the Ross Hook Pattern aims to identify key reversal points and provide a framework for traders to enter and exit trades. In this article, we will delve into the workings of the Ross Hook Pattern and explore how it can be used to make better trading decisions.

What is the Ross Hook Pattern?

The Ross Hook pattern is a price action pattern in Forex trading that appears after a reversal pattern, specifically the 1-2-3 reversal pattern. It can occur after either a bullish or bearish reversal and signifies a continuation of the new trend that is forming.

To identify the 1-2-3 reversal pattern, traders must identify three pivots. The first pivot is the highest point of the strong trend, which is identified by drawing a support trend line beneath the trend. The second pivot in an up-trending market is the lowest point after the retracement from Pivot 1. The third pivot is the final retracement in the downtrend direction, which must be in between the first and second pivots.

To identify the Ross Hook pattern, traders must first identify the 1-2-3 reversal pattern. For the 1-2-3 high, the Ross Hook pattern appears after the 1-2-3 pattern on the new reversal downtrend that forms. For the 1-2-3 low, the Ross Hook pattern forms after the 1-2-3 pattern on the new reversal uptrend that forms.

It is important to note that the 1-2-3 reversal pattern and Ross Hook pattern can be found on any Forex timeframe, but it is best to stick with the 15-minute chart and higher if you are a beginner or an intermediate user of the pattern. Lower time frames can be volatile and difficult to trade. By understanding and identifying the Ross Hook pattern, traders can make more informed trading decisions and potentially increase their profits.

Ross Hook Pattern Strategy

For the Ross Hook buy pattern, traders should wait for a 1-2-3 low to form, indicating a reversal from a downtrend to an uptrend. Once the Pivot 2 level of the pattern is broken and a new high is formed, the price retraces back down. For a valid Ross Hook pattern, the retracement should not go below Pivot 3 of the 1-2-3 pattern. After the retracement, the price should form a U-turn to continue its uptrend movement and create the hook shape.

Conversely, the Ross Hook pattern to sell occurs after a 1-2-3 high, indicating a reversal from an uptrend to a downtrend. Traders should wait for the price to break below Pivot 2 of the pattern and form a new low. After the retracement, the price should form a U-turn to continue its downtrend movement and form the hook shape.

Stop-loss orders can be set above the recent high for a downtrend and below the recent low for an uptrend. Traders can also set take profit orders by measuring the distance between Pivot 3 of the 1-2-3 pattern and the Hook of the Ross Hook pattern, looking for previous support or resistance levels, or using trailing stops. However, traders should exercise caution when setting trailing stops to avoid setting them too tight or too loose.

Buy Signal

Ross Hook Pattern Buy Signal

Ross Hook Pattern Buy Signal

Look for a 1-2-3 Low pattern to confirm a reversal from a downtrend to an uptrend.

Wait for the price to break the Pivot 2 level of the 1-2-3 pattern and form a new high.

Look for a temporary retracement back down, which should stay above the Pivot 3 level of the 1-2-3 pattern.

Look for a U-turn in the price to continue the uptrend movement and form the shape of a hook.

Open a long position when the above conditions are met.

Set your stop loss below the most recent low or according to your money management strategy.

Take profits by measuring the price distance from Pivot 3 of the 1-2-3 pattern to the Hook of the Ross Hook pattern or by identifying previous support or resistance levels that the price has respected in the past.

Sell Signal

Ross Hook Pattern Sell Signal

Ross Hook Pattern Sell Signal

Look for a 1-2-3 High pattern to confirm a reversal from an uptrend to a downtrend.

Wait for the price to break the Pivot 2 support level of the 1-2-3 pattern and form a new low.

Look for a temporary retracement backup, which should not go past the Pivot 3 level of the 1-2-3 pattern.

Look for a U-turn in the price to continue the downtrend movement and form the shape of a hook.

Open a short position when the above conditions are met.

Set your stop loss above the most recent high or according to your money management strategy.

Take profits by measuring the price distance from Pivot 3 of the 1-2-3 pattern to the Hook of the Ross Hook pattern or by identifying previous support or resistance levels that the price has respected in the past.

Ross Hook Pattern Pros & Cons

Pros

Provides clear entry and exit signals for traders.

Helps traders identify potential trend reversals.

Can be used in conjunction with other technical analysis tools

Cons

False signals can occur, leading to losses.

Requires experience and skill to accurately identify the pattern.

May not be suitable for all trading styles or market conditions.

Conclusion

In conclusion, the Ross Hook pattern is a popular technical analysis tool that can be used by traders to identify potential trend reversals and make profitable trading decisions. However, like any other trading strategy, it has its advantages and disadvantages, and traders must understand them before incorporating it into their trading plan. Ultimately, the success of the Ross Hook pattern depends on the trader’s ability to effectively identify and interpret the pattern’s signals and implement proper risk management strategies

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The Forex Geek

Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.