🔰Patterns often emerge when reading cryptocurrency charts, leading to more predictable future price movements. These formations within the chart can be used to identify when to invest in cryptocurrencies and the continuation of the trend, as well as bullish or bearish momentum.
Some of the most recognized chart patterns generally for Bitcoin and cryptocurrencies are as follows:
📊Reversal patterns: Head and Shoulders, Inverse Head and Shoulders, Cup and Handle, Double Top/Bottom, Rising and Falling Wedge.
📈Continuation patterns: Pennants, rectangles, flags, ascending and descending wedges.
🔰Bilateral patterns: Symmetrical triangles, ascending or descending triangles.
🔰A bilateral chart pattern is one that can result in a price breakout in either direction.
🔰Many of the chart patterns used for Forex trading are also applicable to cryptocurrencies.
📢There are other ways to identify if a trend will continue or if it is about to reverse by reading a cryptocurrency chart.
📈Higher high, higher low: a bullish pattern indicating that prices are continuing to rise and the uptrend is intact. Prices continue to exceed their previous highs, and pullbacks are not as low as previous ones.
📉Lower high, lower low: a bearish pattern indicating that prices are falling and the downtrend is intact. Prices cannot exceed their previous highs, and new lows are formed at each pullback.
📢These are very important to observe when trading Bitcoin and other cryptocurrencies, as they provide a broader picture regarding the overall trend.
Divergences can be observed when there is a disagreement between indicators and prices or chart patterns.
📈In an uptrend, this occurs when the price rises higher, but the indicator does not, and in a downtrend, divergence occurs when the price reaches a lower point, but the indicator does not. When divergence is detected, there is a higher probability of a price pullback.
🔰There are other patterns to read in cryptocurrency charts, such as Elliott Waves, which work with the natural rhythm of mass psychology in the market, manifesting in waves.
