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  • Identifying Key Levels in Price Action Trading (Beginner’s Guide Series Part 1)

    Identifying Key Levels in Price Action Trading (Beginner’s Guide Series Part 1)

    Welcome to one of the most essential skills in price action trading: identifying key levels. These are specific price points on a chart where the market tends to react, either by reversing, consolidating, or breaking out. For beginners, mastering key levels means you can make smarter trading decisions with just a few simple lines on your chart. In this guide, we’ll break down what key levels are, how to identify them, and how to use them with recent examples from Bitcoin (BTC) and Ethereum (ETH). Let’s dive in!

    4 Types of Key Levels

    Before we start, let’s understand the four types of key levels you’ll encounter:

    1. Technical Key Levels: These are based purely on technical analysis (TA) and price action—your bread and butter as a trader.
    2. Weekly Levels: These are tied to weekly market sessions, specifically Monday highs, Monday lows, Friday highs, and Friday lows, reflecting the opening and closing of traditional stock markets.
    3. Psychological Levels: These are round numbers that retail traders focus on, like $100,000 for BTC or $4,000 for ETH. They’re popular because they’re easy to spot and often trigger buying or selling.
    4. Event-Based Levels: These are tied to major market events, like Federal Reserve announcements or crypto-specific news (e.g., ETF approvals). They’re less common but can influence price action.

    For beginners, we’ll focus on technical key levels and weekly session key levels in this article, as they’re the most reliable and practical for everyday trading. We’ll also use recent BTC and ETH examples to show how these levels work in real markets.

    Identifying Technical Key Levels

    Technical key levels are price points where the market has shown significant reactions—think strong bounces, rejections, or breakouts. To find them, you’ll create ranges on your chart, which consist of three main components: range low, range high, and mid-range. Here’s how to spot them:

    • Range Low: This is a swing low where the price bounces strongly after a dump. It acts as support.
    • Range High: This is a level where the price faces resistance, often rejecting or breaking out after a rally.
    • Mid-Range: Defining a mid-range is not necessarily the halfway point between the range low and range high, but rather a “loose” S/R level where price often finds reactions. Price action is almost always volatile around this key level and requires careful analysis.

    Let’s walk through a step-by-step process using a recent BTC example. I will also be referring to specific dates in the images below. But since I do not want to clutter the chart, you can open your TradingView to refer to those dates if you want to follow along without any confusion!

    Example: Bitcoin’s Technical Key Levels (February-May 2025)

    Figure 1. BTCUSDT.P on Bybit (1D Timeframe)

    From February to May 2025, BTC was trading in a range between $78,210.5 (range low) and $95,058.7 (range high). Now I know what you’re thinking: price has dumped to as low as $74,456.2 and pumped to as high as $97,868 (marked by the yellow semi circles), but how are those price points not considered as range low and range high? These are called “deviations” and we will explain this in the next article (you don’t need to know this yet as they are for actual trade executions, whereas identifying key levels is generally the strategy part).

    Range Low ($78,210.5): From February 24 to February 28, BTC dumped from $96,536.3 to $78,210.5 with almost no sustaining buying pressure. But from February 28 to March 2, BTC bounced sharply from $78,210.5 to $95,058.7. This strong bounce confirms $78,210.5 as the range low, acting as support.

    Range High ($95,078.7): Shortly after BTC rallied to $95,078.7, price failed to go any higher and rejected strongly the following days. What makes this an even stronger range high is the fact that price nearly retested the $96,536.3 price point on February 24 which triggered the sharp dump in the first place.

    Mid-Range ($87,178): The middle of this range, around $87,178, saw choppy price action. It primarily acted as a “mini resistance” from March 7 to April 20 where price rejects every time it retested $87,178. But on April 21, the daily candle closed above the mid-range which showed buying strength, and the following day BTC pumped to as high as $94,000 after retesting the mid-range on market open. From there on, the mid-range acts as a support if price reverses from the range high. This is also known as a higher time frame (HTF) support/resistance (S/R) flip region, as it’s significant on both 4-hour and daily charts.

    The Tricky Thing about Mid-Range

    Mid-ranges can change as price action develops over time. Look at the chart below and you will see that there was another mid-range at $85,023.4 (marked by the yellow dotted line). Price found its way there after the rejection off of range high and had another strong bounce to $92,781.6 before reversing to the downside again and retesting the range low.

    Figure 2. BTCUSDT.P on Bybit (1D Timeframe)

    The yellow dotted line was the S/R region before April 21. But after the breakout on April 21 and more importantly the strong continuation on April 22, we now see the bigger picture – there is an imbalance of liquidity created by the buyers on April 21 and 22. At some point in the future, it is likely those areas will get filled which overlaps with the current mid-range (white dotted lines).

    Anyways, the most important principle you have to remember is the more reactions the key level have seen, the more valid they are as a key level, and this is especially applicable to mid-ranges. The current mid-range of BTC as shown above still saw multiple rejections same as the previous mid-range.

    What Happens If Price Breaks Out of Range?

    Figure 3. ETHUSDT.P on Bybit (3D Timeframe)

    From January 22, 2024 to March 3, 2025, ETH was trading in a range between $2,167.17 and $4096.21. For the longest time, the range low held strongly as an HTF support – price had bounced sharply from the range low 3 times. But on March 9, 2025, price has completely broken below the range low and failed to reclaim it the following week. This means the yellow-lined ranges are no longer in play.

    In such situations, we will need to look further back to identify previous pivot points and establish our new key levels.

    Figure 4. ETHUSDT.P on Bybit (1W Timeframe)

    Going all the way back to January 2022, we have marked out previous pivot points and used those areas as our new key levels for ETH.

    New Range Low ($877.7): Price dumped from $3,581 to $877.7 and then strong bounce from there to $2,029.4. Remember, the first swing low often serves as the range low.

    New Range High ($3,581): Marked from the initial dump at $3,581 in April 2022. You can also use the previous range high at $4,096.21 (figure 4) as the current range high – there’s nothing wrong with that! However, if you look closely, you will notice the price action above $3,581 are “swing failure patterns” which you will learn in the next article along with “deviations”.

    New Mid-Range ($2,155): Notice how the previous range low (figure 3) coincides with our new mid-range. Yes! More often than not, new mid-ranges come from previous range lows (if bearish) and previous range highs (if bullish).This is because it is in the nature of mid-ranges to play the critical role of S/R flip regions. Look closely and you will see that before January 2024, $2,155 was a strong resistance for ETH until it flipped support from there on until the collapse on March 9, 2025.

    Now let’s bring up both the yellow and white ranges and you will see the full picture.

    Figure 5. ETHUSDT.P on Bybit (1W Timeframe)

    So in terms of our current play for ETH, until the current mid-range at $2,155 is reclaimed, there is a possibility that the range low, though not guaranteed, will be retested.

    Identifying Weekly Session Key Levels

    Weekly levels are based on significant price points from the start and end of the trading week—specifically Monday highs, Monday lows, Friday highs, and Friday lows. These levels reflect the opening and closing dynamics of traditional markets and are often respected in crypto trading as well. They’re excellent for short-term trades, helping you set precise entry points, stop-losses, and take-profit targets. Plus, they can act as liquidity zones where market makers might target stop-losses, so you’ll need to watch for potential traps.

    Let’s look at a real-world example using Bitcoin (BTC) on a 4-hour chart from early May 2025. The chart marks key weekly levels from the previous week and the start of the current week, giving us a clear framework to work with.

    Figure 6. BTCUSDT.P on Bybit (4H Timeframe)

    Previous Friday High ($97,868.0): This was the highest price on the last trading day of the previous week (May 2). It acts as a resistance level.

    Previous Friday Low ($96,306.9): The lowest price on that Friday, serving as a support level.

    Monday High ($95,149.0): The highest price on Monday, May 5, 2025, acting as a potential resistance or target.

    Monday Low ($93,460.2): The lowest price on Monday, serving as a key support level.

    Here’s how these levels played out and how you can use them in your trading:

    • Friday Levels as a Range: The Previous Friday High ($97,868.0) and Low ($96,306.9) form a range that price often respects. On May 2, the price reached $97,868.0 but rejected sharply, dropping to $95,500.0 by May 3. This rejection confirms the Friday High as a strong resistance. The price then consolidated near the Friday Low ($96,306.9) on May 4, showing that this level acted as support during the decline.
    • Monday Levels as Support/Resistance: On Monday, May 5, the price dropped to the Monday Low ($93,460.2) early in the session, marking a significant support level. It then bounced sharply, rallying to the Monday High ($95,149.0) later that day. The Monday Low held as support when the price retested it on May 6, bouncing to $94,500.0. Meanwhile, the Monday High ($95,149.0) acted as resistance on May 7, where the price wicked above but rejected back down to $94,300.0.
    • Trading Application: Let’s say you’re looking to trade on May 6 after the price bounces from the Monday Low ($93,460.2). You could enter a long position at $93,600.0, targeting the Monday High ($95,149.0) or even the Previous Friday Low ($96,306.9) for a higher reward. Place your stop-loss just below the Monday Low, around $93,300.0, to protect against a breakdown. This setup gives you a high reward-to-risk (RR) ratio: the distance to $96,306.9 (2,706.9 points) is much larger than your risk (300 points), yielding a 9:1 RR.
    • Liquidity Traps: Notice the wick below the Monday Low ($93,460.2) on May 5, dropping briefly before bouncing. This is a classic liquidity grab—market makers likely pushed the price below to hit stop-losses before reversing. Similarly, the rejection at the Previous Friday High ($97,868.0) on May 2 trapped breakout buyers. Be cautious around these levels, as wicks often signal traps.

    How to Use Weekly Levels in Practice?

    If the price holds above the Monday Low ($93,460.2), look for longs targeting the Monday High ($95,149.0) or Previous Friday Low ($96,306.9). If it breaks below, consider shorts targeting the next support, like $92,500.0 (a recent swing low). For stop-losses, place them just outside the weekly levels—below the Monday Low for longs, or above the Friday High for shorts—to avoid being caught in liquidity grabs.

    Tips for Weekly Levels

    • Mark the Levels: Use UTC timezone to identify Monday and Friday key levels. On the chart, draw lines at the highs and lows of those candles. For example, the Monday High ($95,149.0) and Low ($93,460.2) on May 5 are clear markers for the week.
    • Watch for Reactions: Look for rejections, bounces, or breakouts at these levels. The rejection at $97,868.0 (Previous Friday High) and the bounce from $93,460.2 (Monday Low) show how price respects these zones.
    • Combine with Other Levels: Weekly levels work best when paired with technical levels (like mid-ranges or HTF S/R flips). For instance, if the Monday Low aligns with a mid-range, it’s an even stronger support.

    Ever since ETFs for BTC and ETH have been approved, large institutional players have become involved with trading BTC and ETH. This makes weekly levels a powerful tool for short-term trades. They give you clear targets and stop-loss zones, but always be mindful of liquidity traps, as seen with the wicks around these levels.

    Conclusion

    The most important principle to take away from identifying key levels in price action trading is that the more reactions a key level has seen, the more valid and reliable it becomes. Whether it’s a range low, range high, mid-range, or weekly level, the significance of a price point grows with each bounce, rejection, or breakout it experiences, as these reactions reflect the market’s memory and the involvement of both retail and institutional players.

    Key levels give you clarity by giving structure to the market’s historical data. But remember, this is just the planning part. Even if you have mastered this part at identifying key levels, the actual trade executions can be very different. We will cover this in the next article.

  • Top Chart Patterns Every Crypto Trader Should Know

    Top Chart Patterns Every Crypto Trader Should Know

    Chart patterns are an integral aspect of Technical Analysis, but they require some getting used to before they can be used effectively. A chart pattern is a shape within a price chart that helps to suggest what prices might do next, based on what they have done in the past. Chart patterns tend to repeat themselves and can give you a real competitive advantage in the markets if you are able to learn to recognize them.

    The market is constantly changing. In many cases, it does not matter how you feel about it, it only matters how the market is going to feel about it.

    Market sentiment is a critical indicator to predict price movements and make investment decisions. An easy way to gauge market sentiment is by looking at chart patterns. They tend to repeat themselves, and once you are able to recognize them, it becomes easier to strategize your entries and exits.

    However, it is important to note that they are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

    The most important thing to remember when using chart patterns as part of your technical analysis is that they are not a guarantee that a market will move in that predicted direction, they are merely an indication of what might happen to an asset’s price. Below are some of the most common chart patterns studied by technical analysts as they appear on the Bitcoin/USD chart:

    1. Head and Shoulders

    This is a bullish and bearish reversal pattern that has a large peak in the middle and smaller peaks on either side. The Head and shoulders pattern is considered to be one of the most reliable reversal chart patterns. This pattern is formed when the prices of the stock rise to a peak and fall down to the same level from where they had started rising. Again, the prices rise and form a peak higher than the last peak and again it declines to the original base. Prices again rise to form a third peak, which is lower than the second peak and from here it starts declining to the base level. When the prices break the baseline with volume then a bearish reversal takes place.

    Head and shoulders is a chart pattern in which a large peak has a slightly smaller peak on either side of it. Traders look at head and shoulders patterns to predict a bullish-to-bearish reversal. Typically, the first and third peak will be smaller than the second, but they will all fall back to the same level of support, otherwise known as the ‘neckline’. Once the third peak has fallen back to the level of support, it is likely that it will break out into a bearish downtrend.

    Head and Shoulders
    Head and Shoulders

    2. Double Top

    A double top is a bearish reversal pattern that traders use to highlight trend reversals. The price forms a peak and retrace back to a level of support. It will then climb up once again before reversing back more permanently against the prevailing trend. A double top is a bearish pattern as it signifies the end of an uptrend and a shift towards a downtrend.

    Double Top
    Double Top

    3. Double Bottom

    A double bottom is a bullish reversal pattern that is opposite to the double top. Price forms a peak and then retrace back to a level of resistance. It then forms a peak once more before reversing back from the prevailing trend. A double bottom is a bullish reversal pattern, because it signifies the end of a downtrend and a shift towards an uptrend.

    Double Bottom
    Double Bottom

    4. Wedges

    Wedges are bullish and bearish reversal as well as continuation patterns which are formed by joining two trend lines which converge. There are two types of the wedge, rising and falling. Both rising and falling wedges are reversal patterns, with rising wedges representing a bearish market and falling wedges being more typical of a bullish market.

    • A rising wedge is represented by a trend line caught between two upwardly slanted lines of support and resistance. This pattern generally signals that an asset’s price will eventually decline more permanently, which is demonstrated when it breaks through the support level.
    • A falling wedge occurs between two downwardly sloping levels. This pattern is usually indicative that an asset’s price will rise and break through the level of resistance.
    Wedges
    Wedges

    5. Cup and Handle

    The cup and handle pattern is a bullish continuation pattern that is used to show a period of bearish market sentiment before the overall trend finally continues in a bullish motion. The cup appears similar to a rounding bottom chart pattern. Following the cup, the price of an asset will likely enter a temporary retracement, which is known as the handle because this retracement is confined to two parallel lines on the price graph. The asset will eventually reverse out of the handle and continue with the overall bullish trend.

    Cup and Handle
    Cup and Handle

    6. Pennants

    A pennant pattern or a flag pattern is created when there is a sharp movement in the price either upward or downward. This is followed by a period of consolidation that creates the pennant shape because of the converging lines. Then a breakout movement occurs in the same direction as the big stock move. At the initial stock movement there is a significant volume which is followed by weaker volume in the pennant section and then rise in the volume at the breakout. Pennants can be either bullish or bearish, and they can represent a continuation or a reversal.

    Pennants
    Pennants

    7. Triangles

    Ascending Triangles

    The ascending triangle is a bullish continuation pattern which signifies the continuation of an uptrend. It can be drawn onto charts by placing a horizontal line along the swing highs, which acts as the resistance, and then drawing an ascending trend line along the swing lows, the support. Eventually, the trend breaks through the resistance and the uptrend continues.

    Ascending Triangles
    Ascending Triangles

    Descending Triangles

    Just like the ascending triangle, the descending triangle is also a continuation chart pattern. The only difference is that it is a bearish continuation pattern and it is created during the downtrend. They generally shift lower and break through the support because they are indicative of a market dominated by sellers. Descending triangles can be identified from a horizontal line of support and a downward-sloping line of resistance. Eventually, the trend breaks through the support and the downturn continues.

    Descending Triangles
    Descending Triangles

    Symmetrical Triangles

    Symmetrical Triangles are continuation chart patterns that are developed by two trend lines which converge. The symmetrical triangle pattern can be either bullish or bearish, depending on the market. In either case, it is normally a continuation pattern, which means the market will usually continue in the same direction as the overall trend once the pattern has formed. However, if there is no clear trend before the triangle pattern forms, the market could break out in either direction. This makes symmetrical triangles a bilateral pattern, meaning they are best used in volatile markets where there is no clear indication of which way an asset’s price might move.

    Symmetrical Triangles
    Symmetrical Triangles

    8. Chart Patterns to Identify Market Manipulation

    The “Bart Simpson” Pattern

    When we look at the Bitcoin chart in small time frames, one can identify sudden movements or ‘bump’ in one direction, followed by consolidation and a sudden ‘bump’ in the other direction that ends close to the base price. This phenomenon has given the name “Barts” because the asset’s price pattern looks like the head shape of the iconic Simpsons character, Bart Simpson.

    It is a familiar occurrence for Bitcoin, one noticed by investors time and again during volatile trading stretches. It appears as a result of hundreds-of-Bitcoin orders in a matter of minutes. The reason for these sudden pumps and dumps is likely to liquidate crypto margin traders, whether short or long, by manipulating the market. While some believe that this is done by the exchanges themselves, which is entirely possible due to the lack of regulations, this might be related to large crypto traders, commonly known as ‘whales.’

    Bart Simpson pattern
    Bart Simpson pattern

    Wyckoff Pattern

    The Wyckoff Pattern was first brought to light by Youtuber “Uncomplication” to unearth potential market manipulation by whales. The pattern was developed by Richard Demille Wyckoff, an early 20th-century pioneer in the technical approach to studying the stock market. The pioneering work of Richard D. Wyckoff was centered around the realization that stock price trends were driven primarily by institutional and other large operators who manipulate stock prices in their favor.

    Wyckoff proposed a heuristic device to help understand price movements in individual stocks and the market, which he dubbed the “Composite Man.” Wyckoff advised retail traders to try to play the market game as the Composite Man played it. The Composite Man attracts the public to buy a stock in which he has already accumulated a sizeable amount. Wyckoff and his associates believed that if one could understand the market behavior of the Composite Man, one could identify many trading and investment opportunities early enough to profit from them. Using Wyckoff’s method, one can invest in stocks by capitalizing on the intentions of the large “smart money” interests, rather than being caught on the wrong side of the market. 

    The Bottom Line

    Technical analysis can give cryptocurrency traders an insight into the past of crypto, facilitating future predictions. But sole reliance on technical analysis ignores sentiment or news. This is particularly problematic with cryptocurrency trading since factors like mining hash rates and governmental regulations can have significant impacts on the market.

    What is technical analysis?

    Technical analysis is a method of analyzing the price movements of a security or asset over time. It uses charts and other tools to identify patterns and trends in order to make predictions about future price movements.

    How does technical analysis work?

    Technical analysis works by looking at past price movements and using these to predict future price movements. This is done by looking at patterns in the data such as support and resistance levels, trend lines, and chart patterns.

    What are the advantages of using technical analysis?

    Technical analysis can be used to identify potential trading opportunities and to help traders make informed decisions. It can also help traders manage risk by identifying areas where they should exit their positions.

    What is support and resistance?

    Support and resistance are levels on a chart where the price of an asset has difficulty either breaking through or falling below. These levels can be used to identify potential entry and exit points for trades.

    What is a chart pattern?

    A chart pattern is a specific pattern that appears on a chart. Common chart patterns include head and shoulders, double tops and bottoms, and triangles. These patterns can help traders identify potential trading opportunities.

    How can technical analysis be used in cryptocurrency trading?

    Technical analysis can be used to identify potential trading opportunities in the cryptocurrency markets. By looking at past price movements, traders can identify patterns and trends that can be used to make predictions about future price movements.

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Bullish Chart Patterns Cheat Sheet: Crypto Technical Analysis

    Bullish Chart Patterns Cheat Sheet: Crypto Technical Analysis

    Technical analysis made easy with bullish chart patterns packed into a cheat sheet, so that you can make better trades at Bitcoin or other cryptos!

    Is Technical Analysis Useful?

    Crypto, as a new asset class, is volatile in nature. Its price fluctuates because it is heavily influenced by supply and demand, and it reflects how the public feels about the asset. This is known as market sentiment — bullish when prices are rising, bearish when prices are falling.

    The market is constantly changing. In many cases, it does not matter how you feel about it, it only matters how the market is going to feel about it.

    Market sentiment is a critical indicator to predict price movements and make investment decisions. An easy way to gauge market sentiment is by looking at chart patterns. They tend to repeat themselves, and once you are able to recognize them, it becomes easier to strategize your entries and exits.

    However, it is important to note that they are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

    Bullish Chart Patterns

    These are some of the most common bullish chart patterns you will see in the market. This cheat sheet will help you identify real-time candlestick patterns whenever you’re on Binance, or other crypto exchanges, so that you can time your entries better.

    Ascending Triangle (Bullish)

    Ascending Triangle (Bullish)

    An ascending triangle is a bullish pattern which signifies the continuation of an uptrend, hence “ascending” triangle. It can be drawn onto the chart by (1) placing a horizontal line along the swing highs, which is the resistance, and then (2) drawing an ascending trend line along the swing lows, which is the support.

    Ascending triangles often have more than two identical peak highs which allow for the resistance line to be horizontal.

    The pattern completes itself when the trend breaks through the resistance, continuing the uptrend. This signifies that the asset has a high buying pressure, and buyers are most likely opting for a long position.

    Falling Wedges (Bullish)

    Falling Wedges (Bullish)

    A falling wedge occurs when the trend line is sandwiched between two downwardly sloping lines, getting narrower as the resistance line gets closer to the support line. In this case, the line of resistance is steeper than the support.

    It may seem like a downward trend but it isn’t. In fact, it is a reversal pattern. A falling wedge is usually indicative that an asset’s price will drop before it rises and breaks through the level of resistance, as shown in the second picture above.

    A falling wedge usually signals the end of the consolidation phase that facilitated a pull back lower. The consolidation phase happens when buyers regroup and attract new buying interest. It can be explained as the “calm before the storm.”

    Double Bottom (Bullish)

    Double Bottom (Bullish)

    A double bottom indicates a period of selling in which the price drops below the level of support. It will then rise to the level of resistance, before dropping again. It resembles a W shape, hence “double bottom.” Jokingly, the W stands for “win”!

    Finally, the trend will reverse and begin an uptrend as the market becomes more bullish. It may seem like a bearish trend, but it is in fact a bullish reversal pattern. This signifies the end of a downtrend and a shift towards an uptrend.

    It is important to note that most traders would jump the gun by entering a position before the pattern is activated. A double bottom is active only once the buyers break the neck line and secure a close above it. This is why it is important to wait for a close above the neck line before entering the market.

    Rounding Bottom (Bullish)

    Rounding Bottom (Bullish)

    A rounding bottom is both a bullish continuation and a reversal. During an uptrend, the price will drop slightly before rising once more. This would be a bullish continuation.

    Afterwards, the bullish reversal occurs when the price is in a downward trend and a rounding bottom forms before the trend reverses and continue upwards.

    Bull Flag and Pennant (Bullish)

    Bull Flag and Pennant (Bullish)

    A bull flag signals that the overall uptrend is likely to continue, followed by a consolidation. It resembles a flag fluttering upwards in the wind.

    Usually, there will be a significant increase during the early stages of the trend, before entering into a series of smaller upward or downward movements. This would be the pennant.

    Pennants can be either bullish or bearish, and they can represent a continuation or a reversal. The picture above is an example of a bullish continuation.

    While a pennant may seem similar to a wedge pattern, as mentioned in the previous section, wedges are much more narrower than pennants. Moreover, wedges differ from pennants because wedges are always ascending or descending, whereas pennants remain horizontal.

    Summary

    These are some of the most common bullish patterns you will see in the market. This cheat sheet will help you better time your entries when the market sentiment is bullish. However, it is important to note that crypto is volatile in general.

    These chart patterns are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

  • Bearish Chart Patterns Cheat Sheet: Crypto Technical Analysis

    Bearish Chart Patterns Cheat Sheet: Crypto Technical Analysis

    Technical analysis made easy with bearish chart patterns packed into a cheat sheet, so that you can cut your loss during the bear market.

    Is Technical Analysis Useful?

    Crypto, as a new asset class, is volatile in nature. Its price fluctuates because it is heavily influenced by supply and demand, and it reflects how the public feels about the asset. This is known as market sentiment — bullish when prices are rising, bearish when prices are falling.

    The market is constantly changing. In many cases, it does not matter how you feel about it, it only matters how the market is going to feel about it.

    Market sentiment is a critical indicator to predict price movements and make investment decisions. An easy way to gauge market sentiment is by looking at chart patterns. They tend to repeat themselves, and once you are able to recognize them, it becomes easier to strategize your entries and exits.

    However, it is important to note that they are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

    Bearish Chart Patterns

    These are some of the most common bearish chart patterns you will see in the market. This cheat sheet will help you identify real-time candlestick patterns whenever you’re on Binance, FTX or other crypto exchanges, so that you can spot bearish trends earlier and better prepare your exits to cut loss.

    Head and Shoulders (Bearish)

    Head and Shoulders (Bearish)

    The head and shoulders pattern is regarded as one of the most reliable trend reversal patterns. It is one of the top patterns that generally signals the end of an upward trend. The pattern is most prevalent among two of the largest coin by market cap, Bitcoin and Ethereum.

    The pattern occurs when a large peak has two slightly smaller peak on its side, resembling the shape of a head in the middle and the shoulders on the sides.

    The only thing you have to know is that all three peaks will fall back to the same level of support, also known as the “neckline.” Once the third peak has fallen back to the support line, it is likely that it will continue into a bearish downtrend. (Alprazolam) Traders would opt to short the market as a result.

    But if the tide turns in favor of a bull market, the asset will attract buying pressure, and the price will reverse into a bullish uptrend as a result. This usually happens if the third peak is slightly higher than the first peak.

    This is why the head and shoulder pattern is reliable because the result of the market being bullish or bearish is 50/50. There is a possibility the price action would go sideways following the third peak.

    Descending Triangle (Bearish)

    Descending Triangle (Bearish)

    A descending triangle is a bearish pattern which signifies the continuation of a downtrend, hence “descending” triangle. It happens when the downward-sloping line of lower highs crosses the support line, continuing the downtrend.

    This means that the market is dominated by sellers. Typically, traders will also enter a short position during a descending triangle in an attempt to profit from the continuous price drop.

    Successively lower peaks are likely to occur and unlikely to reverse. However, it could turn out to be a false breakout in which the price moves sideways for some time after breaking through the support line.

    Rising Wedges (Bearish)

    Rising Wedges (Bearish)

    A rising wedge occurs when the trend line is sandwiched between two upwardly slanted lines, getting narrower as the support line gets closer to the resistance line. In this case, the line of support is steeper than the resistance.

    It may seem like an upward trend but it isn’t. In fact, it is a reversal pattern. A rising wedge is usually indicative that an asset’s price will rise before it drops and breaks through the level of support, as shown in the second picture above.

    Generally, the asset’s price will eventually decline more permanently as a result. The rising wedge is difficult to spot because it resembles a bullish consolidation formation — the series of higher highs and higher lows keep the trend inherently bullish.

    There are no measuring techniques to estimate the decline. But the next best thing is to look at the trading volume. If volume declines as the price rises, the wedge gets narrower. This marks the exhaustion of the buying trend which is a sign of a bearish reversal. Thus, a break of the support line accompanied by high volume confirms the bearish pattern.

    Double Top (Bearish)

    Double Top (Bearish)

    A double top is when the price experiences a peak, before retracing back to the support line. It will then climb up once more before dropping more permanently. It resembles an M shape, hence “double top.” Jokingly, the M stands for working at “McDonalds” during the bear market!

    It may seem like a bullish trend, but it is in fact a bearish reversal pattern. The buyers push the price higher, creating a series of higher highs and higher lows. However, at a certain point, the buyers cannot extend this bullish trend, and the second peak is registered as an equal high as a result. This is when the sellers target this weakness, pushing the price even lower.

    Summary

    These are some of the most common bearish patterns you will see in the market. This cheat sheet will help you spot bearish downtrends earlier so that you can exit and avoid loss. However, it is important to note that crypto is volatile in general.

    These chart patterns are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.