$BTC

Stock Price Behavior Analysis Course

Lesson 17: Analysis of Multi-Candlestick Pattern Types (I)

Today we begin to enter the world of price patterns. Patterns are shapes formed by multiple candlesticks, reflecting collective market behavior. In the first part, we introduce three of the most common reversal patterns.

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1. Head and Shoulders Top

Features:

• Left Shoulder → High Point (Head) → Right Shoulder (High Point Lower than Head)

• When the neckline is broken, it is considered a clear signal of weakening.

Significance:

Market highs gradually lose strength, forming a structure of "left high, middle higher, right lower," which is a common top pattern.

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2. Double Top and Double Bottom

Double Top:

• Price attempts to rise to a similar position twice and fails, with a significant drop in between.

• If the second attempt fails to break through, breaking the neckline is considered the beginning of a downtrend.

Double Bottom:

• Price tests similar low points twice without breaking, with a rebound on the second attempt that breaks the neckline, signaling the start of an uptrend.

These types of patterns symbolize that the market has tested and failed to create new highs/lows, indicating that the trend may reverse.

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3. Rounding Bottom/Rounding Top

• Price slowly forms a rounded structure, gradually turning, similar to a bowl or bell shape.

• A very stable and lasting reversal signal, but takes a long time to form.

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These patterns help you detect changes in market direction early.