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Understanding bullish and bearish patterns is crucial for minimizing losses and making smart trades in crypto or stock markets. Here’s a clear breakdown:
Bullish Patterns (indicate price might rise)
Cup and Handle
Shape: "U" followed by a smaller dip.
Signal: Continuation of an uptrend.
Double Bottom
Shape: “W” pattern.
Signal: Reversal from a downtrend to an uptrend.
Inverse Head and Shoulders
Shape: One deep low (head) between two shallower lows (shoulders).
Signal: Major reversal upward.
Bullish Flag/Pennant
Pattern: Sharp uptrend, then consolidation in a narrow range.
Signal: Breakout higher after consolidation.
Bearish Patterns (indicate price might fall)
Head and Shoulders
Shape: Peak (head) between two lower peaks (shoulders).
Signal: Reversal from uptrend to downtrend.
Double Top
Shape: “M” pattern.
Signal: Reversal from an uptrend to a downtrend.
Bearish Flag/Pennant
Pattern: Sharp drop, followed by brief consolidation.
Signal: Further drop expected.
Rising Wedge
Shape: Prices moving up, but within a narrowing range.
Signal: Breaks downward usually.
How to Use This to Avoid Losses
Set Stop-Loss Orders: Use patterns to set exit points before big drops