BCH / USDT Chart 6hĪs the symmetrical triangle reaches its closure, the volume of trading becomes smaller as traders are usually indecisive about which position to take. Now, these triangles are probably the most common in cryptocurrency trading, and at the same time, the most unpredictable. The famous descending triangle Symmetrical triangle The most famous crypto descending triangle from recent years is the one from 2018 Bitcoin’s chart. Once a downward breakout happens, it is the confirmation of the pattern, and an investor can expect the continuation of the negative price movement.Īs with its ascending counterpart, the target is equal to the widest swing inside the formation transferred from the breakout point downward. The descending triangle is a typical bearish formation where the price action flows between a steady support line and descending resistance, showing growing mistrust towards the crypto asset. Targeted prices can be found by looking at the widest distance between highs and lows, and applied up from the breakout point.Įxperienced traders wait for the significant upward breakout backed with a much bigger volume to take a position, as breakouts without inflated volume can catch traders in a bull-trap (like in the chart above). Those not careful enough can take a position near the support line, wanting to enhance their gains, to end up with a loss as the price movement turns to the bearish formation of a double or triple top. The ascending triangle is considered to be a robust bullish formation, which can lead to massive scores if approached the right way. Investors spot an ascending triangle by the price swinging between the constant line of resistance, and rising support. There is also a reversed head and shoulders pattern which, contrary to what we described above, marks the end of the reign of the market’s bears, which should also be waited out until the last shoulder forms completely until entering the trade. Instead, they should wait for the decline after the right peak to reach the neckline, and then take a position, taking into consideration other important signals. When trading the head and shoulders pattern, investors should not assume that the pattern is going to form. The targeted price in this reversal is equally distanced from the neckline as is the peak of the head, just in the opposite direction (downward). They don’t succeed, and it becomes evident that bears are starting to dominate the market – the trend reverses. However, after the price declines for the second time, bulls try to push it up again (Shoulder 2). ![]() ![]() In technical analysis, a head and shoulders (or H&S) pattern predicts a bullish-to-bearish trend reversal and is regarded as one of the most reliable trend reversal patterns which, if spotted correctly, reveal that an uptrend is nearing its end.Īs the cryptocurrency market is a constant battle between bulls and bears, the head and shoulders pattern comes after a period of the market’s dominance by bulls.Īfter the first price stagnation (Shoulder 1), when the price reaches a new high (Head), it is still possible that the bulls will take the price even higher. ![]() However, the middle peak is higher than the other two, which are similar in size. The head and shoulders pattern is a formation that can, to the inexperienced eye, look like a baseline with three peaks. ![]() Therefore, we are going to start explaining the rudiments with three patterns that traders can find when trading on various exchanges. However volatile the prices of cryptocurrencies may be, experienced traders can sometimes spot distinct movement patterns, allowing them to predict which way the price is going to go. Using this information in combination with other methods, such as trend detection, means that it is highly beneficial to master the technical analysis. Finding ways to predict the future movement of an asset has always been the holy grail of traders across the globe, and crypto traders are no different.Īlthough there are a variety of factors that influence the price of a cryptocurrency in a positive or negative way, such as reaching milestones, partnership signings, hacker attacks, new regulations, etc.
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