Lesson on Basic TA Patterns CONSTANTLY Seen in Crypto
A few technical analysis patterns consistently appear in crypto, especially bitcoin, and are easy to prepare for. Known as classical charting patterns, many of these formations are a combination of a certain set of highs/lows that form into triangles, wedges, trends, flags etc.
Today's lesson is on rising wedges:
What's a rising wedge?
A rising wedge forms after an upward movement in price, and is a reversal pattern. It forms from contracting price action towards the end of the wedge as seen above. 2-3 touches of the top resistance line is needed for confirmation. Declining volume is also a great sign of a falling wedge playing out. Common equation: Falling volume + increase in price = weak move. Upon break of support below the trend line, breakout volume should increase and confirm the pattern playing out.
Usually there is a throwback to the bottom trend line after break of support, as that trend line becomes resistance. Once price re-tests this area, it can move down further.
Here's Bitcoin, currently, on a 12h chart. A rising wedge has definitely formed. The way to play this is simple. As a breakout trader, I'd place a short sell, limit order upon break down of the support level with my stop loss at about $9k.
I'll update what comes next and how this pattern plays out.
Yours truly,
BullsVsBears
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Good info for the new traders, and sure there are a lot of new traders who are first exposed because of crypto. Sure, this patterns are forming due to market psychology, but personally if looking for long term positions, I trade the breakouts and not the formations. This way positions are safer to hold for a longer term.
Same.."As a breakout trader, I'd place a short sell, limit order upon break down of the support level with my stop loss at about $9k."
That'd be a good spot. While everyone screaming that bulls are back, I'm still cautious on how the markets have been playing. It's like mirroring the 2014 bear market. That $1k increase looks like how it happened back then and searched for new lows before really recovering.
Agreed
Great post @bullsvsbears
Recently I have noticed as well that there is many falling wedges, rising wedges, ascending pennants, descending pennants, and triangle patterns. I think this has to do with people treating crypto as a speculative investment, instead of investing in the technology the cryptos are providing.
Keep up the good work, cheers :)
Yeah for sure, the patterns play out due to market psychology and human emotions. I like to look at the long term TFs to get a better idea of sustained moves.
It's good to see that you are also creating contents over trading patterns and strategies. I like your post; simple and clear. I wish you continued success 😌
Thanks mate!
@bullsvsbears Nice post. Pretty good rising wedge on LTC today ;)
A lot of newbie traders can spot these patterns - but how many can trade them and be profitable?
These patterns should be used as confluence to form 1 part of a trading plan and not used solely as an 'indicator' to enter into a trade.
100% agree