Recognizing Chart Patterns in Crypto Trading
Tags: Technical Analysis, Cryptocurrency, Trading, Patterns, Charts

2. Inverted Cup with Handle. This one is similar to the bullish sign but it has mirrored swings. Sell when price closes below the lower line of a handle aka the second smaller swing. The pattern completes when price dumps.

3. Descending Triangle. In this case, the lower horizontal line acts as strong support while the upper trend moves down. Sell when price closes below the support. The pattern is confirmed with at least two touches to both lines.

4. Measured Move Down. Here we have a rectangle again but it’s located between two downtrends. Use the same recommendations and confirmations provided for bearish Flags + Pennants.

5. Descending Scallop. The pattern is a simple inverted Ascending Scallop. To confirm it, you also should draw a horizontal line between the left and right slopes. Sell assets when price closes below this line.

6. 3 Descending Peaks. Again, there will be three price peaks but each subsequent will be located lower than prior ones. Once you’ve spotted three jumps, consider the pattern confirmed. Sell when price closes below the second peak.

Reversal Patterns

Unlike continuation signs, these patterns mark that an ongoing trend is likely to change. The technical analysis states that after a reversal pattern, an uptrend will turn down and vice versa. Thus, after spotting such figure during the bullish market, you want to set Stop Losses or even close part of open positions. Similarly, a reversal figure that appears under bearish conditions may be a strong mark of the emerging rebound.

Overall, there are three main reversal chart patterns:

1.Double Bottoms. This one is pretty simple. You want to find something like a big letter W that begins with a downtrend and features several rebounds. Once price bounces from the support two times, you can buy above the middle top level. It works for Double Tops, as well.

2. Head & Shoulders Tops. The most famous reversal trend consists of one great pick and two smaller ones located on both sides of this middle mountain. You can sell once price breaks below the neckline after the right shoulder. Surely, the inverted Head & Shoulders for bearish trends exist, too.

3. Diamond Bottoms. This figure is similar to the previous one but it has a V-shaped neckline. Diamonds almost always occur during bullish markets and signal the possibility of a breakdown earlier than Head & Shoulders. Trading recommendations are the same but you should be skilled enough to spot this pattern.

The Importance of Fundamental Analysis

The final insight may be obvious but all our readers should clearly realize this fact: even the best technical analysis can’t protect you from losses. That’s why you want to use fundamental analysis in addition to charts. Put simply, this idea provides for studying the chosen coin pairs, market conditions, white papers, even rumors and forum talks. Valuable info can boost your knowledge and help to make more elaborate trading decisions.

To learn more about top crypto coins you can check our Blockchain 3.0+ project, for instance. As well, check out our Facebook and Twitter pages. And feel free to share this info if it was useful. See you!