To be honest, over 2555 days, I've stepped into all sorts of pits and seen enough tricks.
Initially, I had a principal of 300,000, and at the lowest point, I was left with only 60,000. That was a time when I was really close to breaking down, but I didn’t run away. I used the most straightforward methods to gradually endure, rolling it into several tens of millions. The hardest time, I worked on the bottom position for a full 4 months, turning it into 400 times, ultimately securing 20 million.
It sounds like a joke, but that is what I have painstakingly achieved over 2880 days.
My approach has always been clumsy, quietly laying low in bear markets, gradually increasing in bull markets, and clearing positions at the end of the bull run. I focus on a few potential sectors, picking two from each: one leader and one potential, without chasing hotspots, as what you chase will always be the tail.
Too many people make a profit in a bull market for a year, only to give it all back in three months during a bear market. Ultimately, those who can survive the cycles and withstand the rhythm will not fare poorly in the end.
I am a living example. Rely on rhythm, not on gambling. When the time is right, you just need to act; with time, you will naturally live well.
If you are still struggling to find direction, you might try my 'simple method.' It's not difficult; the challenge is whether you can slow down and not make decisions based on emotions.
Opportunities in the crypto space have always existed, but the premise is—you have to survive first.
From 5,000 to a million: roll positions in 3 stages, with specific operations at each step.
First stage: 5,000 → 50,000 (accumulate starting capital and practice sensitivity).
Spot trading initiation: buy BTC and ETH at the bear market low (e.g., when BTC drops to 16,000 in 2023), wait for a rebound of 10%-20% to sell, repeat 3-5 times to roll funds to 20,000.
Small leverage practice: when BTC breaks through key resistance levels (such as 20,000 or 30,000), open long positions with 1x leverage, and use floating profits to increase position by 10% upon achieving a 10% profit with a 2% stop-loss. Focus on practicing 'stop-loss + floating profit increase' muscle memory, and complete at least 10 profitable trades before entering the next stage!
Stage 2: 50,000 → 300,000 (capture trend movements, amplify profits)
Operate in a certain trend: for example, if BTC holds above the 30-day line on the daily chart with volume increasing by more than three times, confirm the upward trend before rolling positions (such as after the BTC ETF passes in January 2024).
Position scaling: increase position by 30% of floating profit every 15% profit (for example, if 50,000 profit is 15% to 57,500, take out 2,250 to increase position), keeping total position within 20% of principal.
Profit-taking strategy: take 20% profit for every 50% increase (e.g., if rolling from 50,000 to 100,000, first withdraw 20,000 in cash), lock in profits, and avoid the 'profit reversal' mentality collapse.
Stage 3: 300,000 → 1,000,000 (rely on major cycle trends to earn 'epoch dividends')
Wait for historical opportunities: for example, if Bitcoin rises from the bear market bottom (15,000) to the mid-bull market (60,000), this level of fivefold trend can amplify the rolling positions to over tenfold returns (in the 2020-2021 bull market, some people rolled from 300,000 to 5 million).
Dynamically adjust positions: 10%-20% position in the early trend, increase to 30%-40% in the mid-stage, and reduce back to 10% in the later stage (for example, if BTC rises from 30,000 to 60,000, start with 30,000, increase to 60,000 at 40,000, and reduce back to 30,000 at 50,000).
Ultimate discipline: stop rolling positions when funds reach 800,000, withdraw 500,000 to stablecoins, and continue operating with the remaining 300,000—the endpoint of rolling positions is 'locking in wealth,' not 'rolling forever'!
Someone asked me: Is it relying on insider information or hitting the jackpot? I’ll tell you directly—neither. My secret, which you might laugh at, is a set of 'simple methods.' Over three years, I managed to roll my account to 56.49 million U.
I have always viewed trading cryptocurrencies as leveling up in a game; surviving is more important than anything else. Today I will share these six 'iron rules'; whether you can follow them depends on your patience.
Rule 1: Fast rises and slow falls indicate that the market is consuming.
Don't panic and run; this is mostly a washout. A true peak is a rapid increase in volume followed immediately by a waterfall; that is when to cut losses.
Rule 2: Rapid declines and slow rises indicate that the market is distributing.
Do not mistake a rebound after a flash crash for a bargain; that is the last knife. Do not ask, 'Can it still drop?' It can!
Rule 3: A volume increase at the top does not necessarily mean a top; no volume is the danger.
If there is still volume at high levels, there may be another surge; if there is no volume at high levels, that is the quiet before the crash.
Rule 4: Don't rush after a volume increase at the bottom; persistence is what counts.
A one-time increase in volume may be a bait. Continuous increases in volume over several days, especially after a period of low volume and fluctuation, is a true signal for building positions.
Rule 5: Trading cryptocurrencies is about trading emotions, and emotions are hidden in volume.
Candlesticks are just the results; volume is the thermometer of emotions. No one plays, volume shrinks; funds pour in, volume explodes.
Rule 6: Nothing is the ultimate realm.
No obsession, dare to hold no positions; no greed, do not chase highs; no fear, dare to bottom fish. This is not a Zen mentality but rather a top-tier trading mindset.
To be honest, opportunities in the crypto space are never lacking; what's lacking is whether you can control your hands, see the situation clearly. Most people are not slow enough; they are just stumbling around in the dark. Brothers, stumbling around in the dark will eventually lead to a fall. Only those with a light can find their way out. Don't force it; keeping pace is the right answer.
There is a very simple trading method that allows you to maintain 'eternal profits', making 30 million! This method achieves an 80% win rate! Indicators you must know when trading cryptocurrencies [34 classic candlestick pattern illustrations]—once mastered, the crypto space will be your 'ATM'.
What are candlestick patterns?
Candlestick patterns (candlestick formations) are a charting tool used to visually represent price fluctuations. They show the opening price, closing price, highest price, and lowest price of a stock or financial asset over a specific time period. Each candlestick consists of a body and shadows, where the body indicates price changes between opening and closing, while the shadows reflect the highest and lowest prices during that period.
By observing these patterns, traders can identify opportunities to buy or sell. For instance, based on specific candlestick (or combination) patterns, traders can determine whether the market trend is rising or falling, allowing them to decide when to enter or exit positions.
Candlesticks not only provide important information about market trends, but also help traders determine support and resistance levels, identify reversal signals, and understand overall market sentiment. Especially in highly volatile markets where traditional analysis methods may not be as intuitive, candlesticks become particularly useful. By mastering candlestick patterns and their meanings, traders can develop trading strategies more confidently and gain an advantage in the market.
How to read candlestick information?
Candlestick charts are a powerful tool for analyzing market trends, and their intuitive representation makes it easier for traders to understand price changes and make buy and sell decisions accordingly.
Each candlestick represents a specific time period, such as a day or an hour, containing four key prices: opening price, closing price, highest price, and lowest price.
◎ If the opening price is lower than the closing price, the candlestick is usually green or white (opposite in the Chinese market), indicating a price increase.
◎ If the opening price is higher than the closing price, the candlestick is usually red or black (opposite in the Chinese market), indicating a price decline.
The body of the candlestick represents the price change from open to close, while the shadows show the highest and lowest prices during that time period. The longer the shadows, the greater the price volatility.
To understand candlestick charts, one must not only grasp these basic components but also learn common patterns such as doji, hammer, and spinning top. These patterns can reveal potential trend changes in the market. When used in conjunction with other technical analysis tools, candlesticks can help traders make more accurate decisions and seize opportunities in trading.
Single candlestick pattern
In stock market trading, single candlestick patterns are one of the important concepts that must be mastered. A single candlestick pattern consists of only one candlestick. Typically, these patterns can be used to predict future price trends and volatility intensity.
There are primarily four types of single candlestick patterns, each providing important information about market direction and momentum:
◎ Bullish Engulfing Pattern: This pattern occurs when a bearish candlestick is followed by a larger bullish candlestick, indicating that buyers have taken control.
◎ Bearish Engulfing Pattern: This is the opposite of the bullish engulfing pattern, occurring when a bullish candlestick is followed by a larger bearish candlestick, indicating that sellers have taken control.
◎ Hammer Pattern: This pattern occurs after an extremely long lower shadow, followed by a small body with almost no upper shadow, indicating strong buying pressure, suggesting that prices may rise in the short term.
◎ Shooting Star Pattern: This pattern occurs after an extremely long upper shadow, followed by a small body with almost no lower shadow, indicating strong selling pressure, suggesting that prices may decline in the short term.
These patterns are just a small part of the many patterns in technical analysis. While they aid in judging potential price movements, it is important to remember that these patterns do not guarantee price changes. Traders must closely monitor current market conditions and adjust their strategies based on actual circumstances.
1. Doji
The doji candlestick pattern forms when the opening and closing prices are the same or very close, indicating that the market is in a state of hesitation and may suggest potential for a trend reversal.
The doji is typically regarded as a signal of balance between bullish and bearish forces, indicating that the market's direction is unclear. The doji can also be used to confirm existing trends, usually appearing after a prolonged trend or as part of a long-term trend. Additionally, the doji may also suggest the end of a trend or the beginning of a new trend.
As with any chart pattern, it is important to confirm with other indicators (such as volume, momentum indicators, or trend lines) before making trading decisions. With proper analysis, the doji can become a powerful tool for traders.
2. Hammer.
The hammer candlestick is a candlestick pattern characterized by a small body and a long lower shadow, indicating that during a downward trend, buyers have intervened and pushed prices back up.
The hammer is regarded as a bullish reversal pattern. Its appearance indicates that the control of prices by bears is weakening, and buyers are pushing the market to rebound. This may also suggest the possibility of a market bottom or trend reversal. Before taking any action, traders should observe whether there are confirmation signals. Confirmation signals may come from other indicators, such as volume or moving averages. If the pattern is confirmed, traders can enter long positions during a market rebound.
The hammer candlestick typically consists of one candlestick and requires confirmation from other indicators to take action. It is important to remember that relying on a single indicator is insufficient. Traders should combine various analytical tools to make decisions.
If the hammer candlestick is confirmed, traders should also pay attention to the size and shape of the candlesticks. A large candlestick with a long lower shadow may indicate strong buying pressure at that price level or suggest a potential market bottom.
3. Hanging Man
The hanging man is a reversal pattern of the hammer candlestick. It has a small body and a long lower shadow but occurs after an upward trend, potentially signaling that the trend will reverse to a downward trend. Investors should pay attention to market risks when the hanging man appears.
Technical analysts often use the hanging man to identify potential trend reversals, helping investors decide whether they should enter or exit a trade. The key is to stay vigilant about the market, as no one can predict price movements with 100% certainty.
The hanging man has a long lower shadow, little or no upper shadow, and a small body located at the upper end of the trading range. The hanging man is very similar to the hammer candlestick.
The difference is that it appears in an upward trend, generally indicating that the upward trend is about to end.
The shadow of the hanging man candlestick pattern is usually twice as long as its body.
4. Shooting Star
The shooting star is a candlestick pattern characterized by a small body and a long upper shadow, occurring after an upward trend, potentially signaling a trend reversal to a downward trend. The reason for this pattern is that the opening and closing prices are close together, but the highest price exceeds the price level of the previous period.
The shooting star indicates that traders are willing to pay higher prices at the beginning of the cycle but then face strong selling pressure. Therefore, this bearish signal may suggest that the upward trend is no longer being supported, and a downward trend may be starting.
Investors should take action only after confirming this bearish trend, as a shooting star may sometimes just be a brief pause in a strong upward trend. If the shooting star appears near a resistance level, it may also suggest a potential reversal.
5. Inverted Hammer
The inverted hammer is similar to the hammer but occurs after a downward trend. It has a small body and a long upper shadow, indicating that buyers are starting to intervene and push prices up. However, by the end of the trading session, sellers push the price back down.
The inverted hammer can be seen as a signal of buyer interest, potentially kicking off a new upward trend.
6. Gravestone Doji
The gravestone doji has a long upper shadow and no lower shadow, indicating that the price opened and closed at the same level. It typically appears after an upward trend, potentially signaling a trend reversal to a downward trend.
However, it may also indicate temporary hesitation between buyers and sellers. Traders should enter trades only after confirming the trend.
The gravestone doji can be combined with other technical analysis indicators (such as support levels, resistance levels, and moving averages) to help determine potential trading opportunities.
Two-candle pattern
The two-candle pattern is a chart pattern used by technical traders to identify potential trading opportunities. It consists of two candlesticks, one representing the opening and closing prices for a certain period, and the other representing the highest and lowest prices for the same period. The shape of the candlesticks indicates whether the price of an asset is likely to rise or fall in the near future.
Through careful analysis, traders can use this information to decide whether they should enter or exit trades. The two-candle pattern is applicable to any trading strategy and time frame. However, when using the two-candle pattern, traders need to manage risks appropriately, as any trade carries inherent risks.
7. Bullish Engulfing Pattern
The bullish engulfing pattern occurs when a small bearish candlestick is followed by a larger bullish candlestick, which completely engulfs the former. This may suggest that the trend could reverse to an upward trend.
If this pattern appears in a downtrend, it is viewed as a bullish signal indicating that buyers have taken over the market and pushed prices higher.
Traders should enter trades after confirming the trend reversal and set stop-loss orders below the lowest point of the engulfing candlestick to prevent losses.
If traders wish to further confirm a reversal, they can observe higher highs and higher lows over the next few days as bullish activity.
This pattern is very important for traders and usually suggests that the price will rise significantly.
8. Bearish Engulfing Pattern
The bearish engulfing pattern is the opposite of the bullish engulfing pattern. It occurs when a small bullish candlestick is followed by a larger bearish candlestick, which completely engulfs the former. This may indicate that the trend could reverse to a downward trend.
This pattern may be a signal of weakness in the current upward trend, indicating that selling pressure is increasing. To confirm the bearish engulfing pattern, traders should wait for the price to close below the lower boundary of the second candlestick. It is crucial to take action only after this signal is confirmed.
9. Piercing Line Pattern
The piercing line pattern appears after a bearish candlestick and is immediately followed by a bullish candlestick. The opening price of the bullish candlestick is below the previous day's lowest price, but its closing price is above the previous day's midpoint. This may indicate that the trend could reverse to an upward trend.
This pattern is generally viewed as a bullish signal, indicating buying pressure in the market and potentially marking the beginning of an upward trend. The piercing line pattern usually appears at the bottom of a downward trend, suggesting that buyers have taken control and pushed prices higher. However, it should be noted that this may only be a short-term trend rather than a significant reversal.
After the piercing line pattern appears, traders should observe higher highs to confirm that a new upward trend is forming. A stop-loss order can be placed at the previous day's lowest price to prevent losses if the pattern does not develop as expected. After verifying that the pattern has occurred and confirming increased buying pressure in the market, one can take long positions with compact stop-losses.
10. Dark Cloud Cover Pattern
The dark cloud cover pattern is the opposite of the piercing line pattern. It forms when a bullish candlestick is immediately followed by a bearish candlestick, where the opening price of the bearish candlestick is higher than the previous day's high but the closing price is below the previous day's midpoint.
This may indicate that the trend may reverse to a downward trend. In this case, traders should pay attention to changes in market sentiment and act accordingly. The dark cloud cover pattern is considered more reliable when it follows a prolonged upward trend or appears at resistance levels, as this indicates increased selling pressure.
Traders can combine the dark cloud cover pattern with other indicators (such as support and resistance levels, oscillators, or moving averages) to confirm potential trend reversals. It should be noted that relying solely on the dark cloud cover pattern is insufficient for making trading decisions; it should be used in conjunction with other market analysis tools.
11. Bullish Harami
The bullish harami pattern appears after a large bearish candlestick, followed by a small bullish candlestick that is completely contained within the previous day's candlestick body. This pattern may suggest that the trend could reverse to an upward trend. It is important to note that the bullish harami does not always guarantee a trend reversal and should be analyzed in conjunction with other market indicators.
Traders should also be aware of potential false breakouts, where the price breaks out of the range established by the first and second candlesticks but then returns to within that range.
12. Bearish Harami
The bearish harami pattern is the opposite of the bullish harami. It occurs after a large bullish candlestick, followed by a small bearish candlestick that is completely contained within the previous day's candlestick body. This pattern indicates that the trend may reverse to a downward trend. Traders should closely monitor potential bearish harami patterns and act accordingly. It should be noted that the bearish harami may fail and does not always indicate a trend reversal; therefore, traders should remain cautious when trading this pattern.
Additionally, other indicators (such as volume, moving averages, and oscillators) should be combined to confirm reversals. By integrating these factors, traders can better assess their trading strategies and improve their chances of success. The bearish harami is often regarded as a reliable signal indicating that prices may decline.
13. Tweezer Bottoms Pattern
The tweezer bottom pattern appears when two or more candlesticks have the same lowest price, indicating that buyers are entering the market at that level. This pattern suggests that the trend may reverse to an upward trend. The tweezer bottom can be used to identify potential entry points for long trades. Before trading, traders should look for confirmation signals from other technical indicators.
Additionally, traders should set stop-loss levels at the lowest price of the tweezer bottom candlestick to protect against trades not going as expected. Although the tweezer bottom is a potential signal for a trend reversal, it should be noted that it is not always reliable and must be used in conjunction with other technical indicators.
Like any trading strategy, traders should employ risk management techniques to protect their capital. Additionally, traders can use the tweezer bottom pattern for both short and long trades. For example, if the market is in a downward trend, using the tweezer bottom pattern for short trades can capture opportunities in the existing trend.
14. Tweezer Tops Pattern
The tweezer tops pattern is the opposite of the tweezer bottoms. It occurs when two or more candlesticks have the same highest price, indicating that sellers are entering the market at that level. This pattern may suggest that the trend could reverse to a downward trend. Traders should observe whether a bearish candlestick forms after the tweezer tops to confirm a potential trend reversal.
Once a bearish candlestick is identified, traders should enter short positions when the market opens and set stop-loss orders slightly above the tweezer top. Monitoring volume is also important, as an increase in volume usually indicates a stronger trend reversal.
The tweezer tops pattern can also indicate potential resistance levels. If the market reverses multiple times at the same level, it can be seen as a strong resistance area, potentially becoming a 'ceiling' for further price increases. In this case, traders should watch for bearish candlesticks and prepare to enter short positions when the resistance level is not broken.
Triple Candlestick Patterns
The three-candle pattern is a technical analysis method used to identify the formation or reversal signals of price trends. When three consecutive candlesticks gradually rise or fall in their highs and lows, a triple candlestick pattern can be identified. Depending on the type of pattern, this may indicate that the underlying trend is reversing or continuing.
This analysis is based on the assumption that prices exhibit predictable patterns, which can be used to forecast price movements. However, like all technical analysis methods, confirmation with other indicators is necessary before taking action. The triple candlestick pattern is an effective tool for helping traders capture emerging trends or signals in the market.
15. Morning Star Pattern
The morning star is a bullish pattern formed when a long bearish candlestick is followed by a small down gap candlestick, which is then followed by a long bullish candlestick with an upward gap. This pattern may indicate that the trend could reverse to an upward trend. The long bearish candlestick reflects the bearish investment behavior, while the small candlestick is seen as a signal of selling pressure pausing.
Finally, a long bullish candlestick indicates increased buying pressure, and bulls have taken over the market. Traders should confirm potential reversals by monitoring volume and relevant technical indicators. If the morning star appears in an upward trend, it may suggest a trend reversal to a downward trend; conversely, if it appears in a downward trend, it may be interpreted as a signal for upward reversal.
16. Evening Star Pattern
The evening star is the opposite of the morning star and is a bearish pattern. It forms when a long bullish candlestick is followed by a small upward gap candlestick, which is then followed by a long bearish candlestick with a downward gap. This pattern may indicate that the trend could reverse to a downward trend. Traders should note that the evening star pattern only has significance when it appears at the market top, not at the bottom.
If the price declines after the evening star, it may indicate a bearish trend has formed; conversely, if the price continues to rise after the evening star, it may indicate that the bullish trend persists. Traders should be cautious when trading the evening star pattern, as failing to confirm reversals may lead to false signals. Additionally, traders should remember that a single indicator or signal cannot accurately predict future price movements.
17. Three White Soldiers Pattern
The three white soldiers is a bullish pattern formed when three consecutive bullish candlesticks have gradually rising opening and closing prices. This pattern indicates a strong upward trend. This pattern is usually used to indicate that the market has ended its downward trend and may turn upward.
To form the three white soldiers pattern, the opening prices of all three candlesticks must be within the body range of the previous candlestick, showing gradually increasing upward strength. The closing price of each candlestick should be higher than the opening price of the previous candlestick.
18. Three Black Crows Pattern
The three black crows pattern is the opposite of the three white soldiers and is a bearish pattern. It forms when three consecutive bearish candlesticks have gradually declining opening and closing prices. This pattern indicates a strong downward trend and suggests that market participants expect prices to continue following the current trend.
The three black crows pattern is particularly powerful when it appears after a significant upward trend or a long consolidation. Like all technical analysis tools, traders should confirm any bearish signals with other indicators.
19. Bullish Three Inside Up
The three inside up pattern appears after a long bearish candlestick, followed by a small bullish candlestick that is completely contained within the previous day's body, and finally followed by a long bullish candlestick that closes above the previous day's high. This pattern may indicate that the trend could reverse to an upward trend.
This pattern should be used in conjunction with other technical indicators to confirm the trend direction. When trading this pattern, traders should also consider fundamental analysis and risk management principles.
Steps for trading the three inside up pattern:
1. Identify this pattern on the chart. This pattern typically appears after a long downtrend, potentially indicating that bulls are entering the market.
2. Look for confirmation signals from other technical indicators, such as moving average crossovers or breakouts from resistance levels.
3. Buy at the breakout point of the highest point of the pattern, and set the stop-loss below the lowest point. If executed properly, this strategy can yield profits in a market with strong bullish momentum.
20. Bearish Three Inside Down Pattern
The three inside down pattern is the opposite of the three inside up pattern. It appears after a long bullish candlestick, immediately followed by a small bearish candlestick that is completely contained within the body of the previous day's candlestick, followed by a long bearish candlestick that closes below the previous day's low. This pattern may suggest that the trend could reverse to a downward trend.
Traders often pay attention to this pattern to aid in decision-making. When encountering this pattern, one should be aware of its bearish implications and consider establishing short positions. However, it should be noted that the three inside down pattern does not guarantee that prices will fall; it only suggests that a reversal may have occurred and increases the likelihood of further declines.
Continuation Patterns
Continuation patterns are technical analysis tools used to determine the future direction of the market. They are based on observing price behavior over a period of time and using this data to predict the continuation or reversal of trends.
Continuation patterns can be used to determine entry points for buying or selling and provide indications of the current trend's strength, helping traders assess how long a trend may continue. By analyzing continuation patterns, traders can anticipate market movements and make better trading decisions.
21. Rising Three Methods
The rising three methods is a bullish continuation pattern that forms when a long bullish candlestick is followed by three small bearish candlesticks, all of which fall within the range of the first bullish candlestick, followed by another long bullish candlestick. This pattern indicates the continuation of an upward trend.
The three methods pattern can also be referred to as the 'three methods reversal pattern,' which is a strong reversal signal. When the closing price of the third candlestick is above the high of the first candlestick, traders should enter long positions. It is important to note that when trading this pattern, further confirmation signals may be required before taking action.
22. Falling Three Methods
The falling three methods is the opposite of the rising three methods and is a bearish continuation pattern. It forms when a long bearish candlestick is followed by three small bullish candlesticks, all of which fall within the range of the first bearish candlestick, followed by another long bearish candlestick. This pattern indicates the continuation of a downward trend. When the price breaks below the range of the third candlestick and drops below its low point, traders should look for bearish signals to establish short positions.
To prevent price reversals, a stop-loss can be set above the high point of the third candlestick. The falling three methods are considered one of the more reliable continuation patterns. However, it should be noted that in a strong upward trend, this pattern may fail, so caution is advised when trading.
23. Bullish Flag Pattern
The bullish flag is a continuation pattern that occurs after a period of sharp upward movement followed by a short consolidation period, forming a flag. This pattern may suggest the continuation of an upward trend. The formation of this pattern includes: prices experience a rapid rise followed by a brief sideways period of a few days or weeks, and then regain upward momentum.
The flag part should form between two parallel trend lines, with the lower trend line's angle exceeding 45 degrees. Once the upper trend line is broken, it may indicate a recovery of the upward trend.
Traders should focus on volume confirmation to ensure that breakouts are valid. When trading the bullish flag pattern, stop-loss orders should be set below the lower trend line to prevent losses from unexpected price fluctuations. When the price reaches or exceeds the upper trend line of the flag, profit-taking can be considered to maximize gains in successful trades.
24. Bearish Flag
The bearish flag is the opposite of the bullish flag. It occurs when a period of sharp downward movement is followed by a short consolidation period, forming a flag. This pattern may suggest the continuation of a downward trend. After the flag forms, traders may establish short positions in anticipation of further price declines.
As with all chart patterns, it is crucial to wait for confirmation signals before making any trades. Traders should also closely monitor volume and momentum to confirm reversals or continuations of trends.
25. Bullish Pennant
The bullish triangle flag pattern is similar to the bullish flag, but its shape is triangular rather than rectangular. When a sharp upward trend is followed by a short consolidation period, forming a symmetrical triangle, it may indicate the continuation of an upward trend. Traders should pay attention to signals that confirm a breakout above the triangle's upper trend line to establish long positions.
After a breakout occurs, stop-loss should be set at the lower trend line of the flag to prevent losses from widening. The target price can be calculated by adding the height of the triangle to the breakout point. The target price is usually reached about three weeks after the breakout.
Capturing the market's upward trend through the bullish triangle flag pattern can be a good way to profit. However, when trading any pattern, remember that past performance does not guarantee future results, and always manage risk cautiously.
26. Bearish Pennant Pattern
The bearish triangle flag pattern is the opposite of the bullish triangle flag pattern. It occurs after a sharp downward trend followed by a short consolidation period, forming a symmetrical triangle, which may indicate the continuation of the downward trend.
The bearish triangle flag pattern usually appears in a downward trend, signaling that prices may continue to decline. After the initial sharp drop, bears dominate and push prices lower until buying pressure offsets selling pressure. At this point, the price triggers a brief stagnation, forming a flag shape.
27. Bullish Rectangle
The bullish rectangle is a continuation pattern that occurs when the price consolidates between two parallel horizontal trend lines. This pattern may indicate the continuation of an upward trend. The rectangle pattern should contain at least two highs and two lows, with market prices fluctuating between the trend lines.
The bullish rectangle is often seen as a manifestation during periods of unclear market decisions, with the forces of buyers and sellers relatively balanced. When the price breaks out of this pattern, it usually indicates increased trader enthusiasm, but the direction often aligns with the previous trend. Once a breakout occurs, attention should be paid to the continuation of the upward trend, and consideration should be given to establishing long positions.
28. Bearish Rectangle
The bearish rectangle is the opposite of the bullish rectangle. It is formed when the price consolidates between two parallel horizontal trend lines, potentially indicating the continuation of a downward trend. A price break below the lower trend line confirms the bearish rectangle, which could lead to further price declines.
Traders should pay attention to this pattern to identify entry and exit points. Before entering long positions, one should closely monitor whether the price shows reversal signals; if the price breaks upward from the rectangle pattern, it may indicate that the downward trend has reversed and a new upward trend has begun. By carefully monitoring the rectangle pattern, traders can better prepare for entry points and potential reversal signals.
29. Bullish Wedge
The bullish wedge is a continuation pattern that occurs when the price consolidates between two upward-sloping converging trend lines. This pattern may suggest the continuation of an upward trend.
This pattern is generally viewed as a strong price signal. When the price breaks above the upper trend line, it suggests that the current upward trend will continue; when the price breaks below the lower trend line, it indicates a potential reversal and a shift to bearish sentiment. Generally, volume during the formation of the wedge should decrease, and volume will increase again after a breakout or breakdown.
An increase in this activity can confirm the trend and enhance confidence in the direction of the trend. However, traders should be aware that the bullish wedge is not always reliable; false breakouts or break downs may occur. Caution is advised when trading and confirmation with other technical indicators should be sought before making decisions.
30. Bearish Wedge
The bearish wedge is the opposite of the bullish wedge. It occurs when the price consolidates between two downward-sloping converging trend lines. This pattern may indicate the continuation of a downward trend.
When price trends narrow and approach the tip of the wedge, traders should anticipate a breakout either upward or downward. In most cases, the bearish wedge indicates that prices will decline further. This is typically because this pattern suggests that as short sellers become more cautious, market momentum gradually weakens.
31. Bullish Cup and Handle
The bullish cup and handle pattern is a continuation pattern that occurs after a U-shaped consolidation period, followed by a smaller consolidation period forming the 'handle'. This pattern may suggest the continuation of an upward trend.
When the price breaks through the handle and continues to rise, an important indicator to confirm whether the breakout is valid is the volume. If the breakout is accompanied by significant volume, this may indicate that there will be further upward momentum in the future. In addition to volume, traders should also combine other technical indicators, such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), to assess the sustainability of the breakout.
These tools can help traders assess whether the strength behind the trend is strong enough or just a temporary phenomenon. Additionally, traders should focus on potential reversal patterns that may indicate a price pullback.
32. Bearish Cup and Handle Pattern
The bearish cup and handle pattern is the opposite of the bullish cup and handle pattern. It occurs when the price undergoes an inverted U-shaped consolidation period, followed by a smaller consolidation period forming the 'handle.' This pattern may suggest the continuation of a downward trend.
Similar to the bullish cup and handle pattern, traders need to pay attention to whether the price breaks through the resistance level formed by the handle to confirm the trend reversal. If the breakout does not lead to further upward movement, it may indicate that the bearish trend will continue. When trading this pattern, all factors such as volume and price should be considered before entering a trade.
Additionally, traders should set stop-loss levels at reasonable levels to manage risk. By taking these precautions, traders can more effectively utilize the bearish cup and handle pattern as a trading strategy.
The bearish cup and handle pattern can be used to identify short-term trends or potential reversals in the market, making it a flexible trading technique. Traders should closely monitor the volume during the formation of the cup and handle; if volume gradually decreases as prices form lower highs, this may indicate that a reversal is about to occur.
33. Bullish Rounding Bottom
The bullish rounding bottom is a reversal pattern that forms after a long downtrend followed by a U-shaped consolidation period. This pattern may indicate a reversal of the downward trend.
This pattern contains two distinct low points, one below the other, followed by a price rise that breaks through previous resistance. This breakout can be viewed as a buy signal. The formation time of the pattern varies depending on market conditions and may last for weeks to months. An increase in volume during the consolidation period may indicate enhanced buying activity.
Combining other indicators and market conditions can help traders judge whether to enter a trade. This way, traders can take advantage of potential profit opportunities in the market, whether the market is rising or falling.
The bullish rounding bottom may also indicate a turning point in a declining stock trend. When the price drops to a new low and rebounds, forming a rounded bottom, this usually suggests that sellers are becoming exhausted, and buyers are starting to enter, pushing prices higher.
When analyzing potential trades based on the rounding bottom pattern, traders should also consider the overall market environment. If the broader market is in a downtrend, establishing long positions based solely on the rounding bottom pattern may carry higher risks. As with all technical analyses, fundamental factors should also be considered before trading.
Overall, the rounding bottom pattern is a useful tool for helping traders identify potential buy and sell signals in the market. By combining technical and fundamental factors, traders can better assess whether a rounding bottom is forming and incorporate it as part of their trading strategy. Mastering the correct knowledge, the rounding bottom pattern can help increase a trader's win rate.
34. Bearish Rounding Top
The bearish rounding top is a chart pattern that indicates a price decline trend. When the price trend shows a series of lower lows followed by a slight rebound and then returns to lower prices, it will form a bearish rounding top.
This pattern suggests that there is strong selling pressure in the market and indicates that prices may continue to decline in the near term. To identify a bearish rounding top, traders should look for a rounded top containing two distinct low points and two distinct high points.
The overall trend should be downward, but prices should exhibit a certain degree of volatility. Additionally, during this period, trade activity volume should show an increasing trend. Combining these factors can provide important insights into the future price of the underlying asset.
Therefore, traders need to closely monitor stock market or other market volumes and price movements to accurately identify bearish rounding tops. If this pattern is correctly identified, it can provide traders with opportunities to short or protect existing strategies from potential losses.
However, traders should also be aware that bearish patterns are not always reliable and may produce false signals. Thus, when trading these patterns, traders should always implement appropriate risk management.
Moreover, traders need to understand the different types of rounding tops that exist to correctly identify them in the market. By understanding the formation of bearish patterns, traders can better prepare for potential entry and exit points.
Summary
Now that we have discussed all 34 candlestick chart patterns in the market, it is important to remember that these patterns should be used in conjunction with other technical analysis tools and should not be relied upon solely for making trading decisions, as this can enhance profit opportunities.
Overall, learning how to interpret and understand candlestick patterns is an essential skill for traders and investors. By understanding these candlestick patterns and learning to combine them with other technical analysis tools, traders can improve their ability to identify potential opportunities in the market.
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