Bitcoin flash crash March 2020

Learning basic TA (technical analysis) is one of the most important things any investor should do. There are a lot of people on social media saying that TA is out the window, as a result of this Bitcoin correction. However, this is untrue; as there were a couple of indicators showing something was not right. Here are two indicators that I had charted on the Bitcoin chart in Tradingview.

Lower Highs

Finding lower highs on a pattern is simple, just draw straight lines connecting the tops. This view is the 4 hour Bitcoin chart. As you can see the picture shows the lines slopping downward from 1 to 3 (lower highs). This is an indicator of a downward move. I actually thought a breakout was coming as line 3 seems to shows an upward move and retest. However, the patient thing would have been to wait until line 2 was cleared or at least retested .

Descending Wedge

Descending wedges and triangle patterns have a deeper science to them. For the most part descending wedges tend to break out. This descending wedge on the 2 hour chart was a fake out. This means it broke out of the pattern, making it look like an upward move was coming; but then dumped down. I actually saw this pattern breakout but did not follow through to see the pattern play out. Clearly there was at least a 6 hours to get out of the trade before the pattern broke below the wedge.

I will admit I did not act upon these indicators because I just thought the market could not go any lower. It goes to show that we all make simple mistakes and as emotional beings we tend to ignore what is right in front of us. It is clear from this experience that TA did not fail, as many claim.