Crypto chart patterns play an integral role in forecasting cryptocurrency price movements; whether that be bullish flags in an uptrend, or bearish head-and-shoulders patterns. Relying solely on such patterns could prove risky; other indicators and the market context must also support them for accurate predictions.
Bearish Engulfing Pattern – Two Candles Style (BEP) The bearish engulfing pattern (BeP) is a two-candle chart pattern which signals the transition from buyers to sellers and can also serve as an early warning of trend reversal.
Ascending Triangle
Ascending Triangles usually appear during uptrends and serve as an indication that the original bullish trend will continue; however, they can also appear during downtrends as an indicator that bearish moves are ending.
An ascending triangle pattern is distinguished by an upward-sloping lower trendline and horizontal resistance line running along its peaks. When prices break above this upper resistance area, a long trade should be taken. A stop loss should be placed slightly below it while profit targets should be calculated by measuring the height of the triangle at its thickest point and adding/subtracting from it when considering breakout points.
Note that trading patterns aren’t foolproof and should be combined with other tools, like technical indicators and market conditions. Be mindful of false breakouts wherein the price moves outside the pattern’s borders but fails to sustain its transition, eventually falling back inside it again.
Channel Up
Channel up trading patterns provide traders with a buy signal. It comprises two elements – a descending trend line supporting lower highs and an ascending support line connecting higher lows – and traders can utilize altFINS’ intelligent chart recognition engine to automatically recognize 26 trading patterns that produce signals, saving time and effort in their analysis process.
A double-bottom pattern on cryptocurrency charts represents an uptrend reversal that occurs following an extended downward trend, when prices first decrease then rise back up again to form the first low before reaching another one and finally breaking through its neckline or resistance level.
Flag
Cryptocurrency traders employ various trading strategies to generate profits. One strategy involves recognizing trends and patterns on cryptocurrency graphs to predict price movements, although these don’t guarantee profits but can help avoid losing money through wise trades.
Flag patterns appear on cryptocurrency charts when their price experiences an upward trend and are distinguished by steep green candlesticks with narrow pricing bands resembling flagpoles. Traders anticipate that prices will break free of this pattern within weeks as it consolidates.
Once a breakout takes place, it should be accompanied by high trading volume – this indicates momentum is returning and now is an opportune time to buy! Otherwise, false breakouts could occur leading to loss.
Head and Shoulders
The Head and Shoulders pattern is one of the most powerful chart patterns to indicate trend reversal. This three-peak formation forms on price charts: left shoulder (top), decline and subsequent rise up again into right shoulder trough, then prices begin rising to form “head”, usually with higher elevation.
Once you identify a pattern, be prepared for some waiting. Use technical analysis tools and indicators to verify it as well as setting stop loss/take profit levels above the neckline which will act as support/resistance levels when the price reaches them.
Doji
A doji is an indicator of market indecision, showing neither buyers nor sellers have firm control of price. It may appear both during upward and downward trends and be taken as an early warning that it might change direction.
Doji candles often have small bodies with long upper and lower wicks of nearly equal length, often signalling that supply and demand forces have reached equilibrium, which may eventually trigger a shift in market sentiment.
A dragonfly doji that appears after a price advance warns that prices could slide lower; any subsequent move lower serves as confirmation. Conversely, gravestone dojis which appear during uptrends signal possible price reversals and must be seen as warning signals.
