📉 How to recognize the "M" pattern and capitalize on its signals?
This pattern warns of a price crash! Here are the steps to deal with it:
🔍 Pattern Characteristics:
- Two Equal Peaks (Top-1 & Top-2): Separated by a small peak (similar to the letter M).
- Breakdown of Support Level: The strongest signal to start the decline.
🎯 Trading Strategy:
1. First Entry (Entry at Support):
- Expect a bullish rebound from the support level, but be careful (a risky signal).
2. Second Entry (Entry after Breakdown):
- Enter a sell position after breaking the support level with increased trading volume.
3. Stop Loss:
- Place it above Top-2 to avoid losses if the breakout fails.
- Stick to the 10% rule (do not risk more than 10% of your capital).
💡 Important Note:
The pattern may give false signals! Make sure to:
- High trading volume during the breakout.
- Formation of the pattern after a clear uptrend.
🚨 Warning:
The pattern indicates weakness of buyers and the beginning of seller dominance, but it needs confirmation of the breakout and strict risk management.
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