In the world of crypto trading, recognizing patterns can yield more than insights.
In fact, this skill is what traders use to determine the strength of a current trend during key market movements and to assess opportunities for entries and exits. In short, patterns can be useful in determining which direction price is likely to go.
Further, they can help distinguish between what is real and what is false when a break occurs, by using certain formations to dismiss particular price movements. However, you should dedicate a decent amount of time in getting to know particular patterns that biçim during different time frames around the particular asset you are interested in.
The better you become at spotting these patterns, the more accurate your trades develop, with the added ability to dismiss false breakouts as they appear.
Below are three examples to help you along your journey to mastering the charts:
1. Head and Shoulders
The infamous head-and-shoulders pattern is a bearish reversal pattern that signals to traders that there’s been a particular change in the current trend.
Identified by its three peaks (with the highest peak as the “head” and the other two peaks representing the “shoulders”) the pattern also features a “neckline” or “trendline” that is drawn between the two shoulders (at the top of their respective peaks) showing the key support level you should look out for in case of breakdown.
If prices pass below the neckline and continues to fall, it is likely you are staring at a head-and-shoulders pattern completing its formation and bucking any current bullish trend.
Generally, the price is likely to break down further, once the pattern özgü been completed.
The head-and-shoulders pattern usually provides the…