The way a cryptocurrency’s price will move up or down can form a trading pattern that traders must analyze. Such trading patterns for the Bitcoins and other crypto coins can be viewed on a trading chart. This must form the foundation of any successfully crypto trading strategy. Here are the top 5 Bitcoin trading patterns that you should be aware of:
- Head and Shoulders: This pattern is marked by 3 peaks. There will be two small peaks on each sides and one large peak in the center. This trading pattern indicates a trend reversal and may be used for determining the time when a bull trend is nearing its end.
- Cup and Handle: You can detect this on a chart as a bowl shape and a smaller bowl resembling a handle. This trade pattern is another bullish indication telling a trader when he must buy a cryptocurrency. Since the trade pattern shows a trend reversal from bear to bull, it is represented by a cup.
- Flag: This is another common trading pattern; this is bullish and can be identified on a trade chart when you search for a rectangular shape pointing downwards. The right-most border will be missing and the flag is accompanied by a flagpole. The main purpose of this trading pattern is to discern the possible extension of an earlier trend which has been reversed. While a flag symbol may indicate an ongoing upward trend you have to take into account the volume to see if the trend is going to last.
- Higher Highs and Lower Lows: This is a useful trading bot, which helps traders understand whether a crypto coin is experiencing a downward or upward trend. When the crypto asset keeps achieving higher price targets it is believed to be part of an upward trend. Likewise, when the crypto asset is continuously hitting lower price targets, the trend may be considered to be a downward trend. Higher highs represent bullish sentiments and this means that investors are keen to pay higher prices for a specific coin; this can be taken as a positive sign. Lower lows means that the crypto coin’s price is consistently going down. This basically means that Bitcoin traders are buying and selling Bitcoins at low price targets. Such a trend may discourage investors and lead to more price fall. In such a situation, you have to keep looking for triggers which can indicate a change. The main objective of this trading pattern is to help understand a general trend that a crypto coin is moving in. This will then help the trader to use other tools and charts to make an informed decision.
- Wedge: This final trading pattern can be detected on a trading chart when you find two parallel lines meeting over a time-period. This is searched to see if there is a price reversal. When the price of a crypto coin is in an upward trend in the wedge, its price may change and go into a downtrend.
These are the basic trading patterns that every Bitcoin pro must be aware of. These help traders to decide whether the market is going through an upward or downward trend and if there may be a price reversal soon.