There’s a steep learning curve when you’re new to cryptocurrency trading.  Even if you’re an experienced trader, constant upgrades and learning are necessary because you have to dig into more than just the fundamentals. So you have to check on current market trends and study the best and most reliable trading patterns in cryptocurrency.

It’s imperative to know and understand chart patterns for technical analysis. It’s not a walk in the park, as you need to break in before you can use the trading patterns effectively.

What are Trading or Chart Patterns?

If only crypto trading could be predictable, everything would be smooth-sailing and maximize your winnings, right? Well, you can up your chances with the use of reliable trading patterns in cryptocurrency.

A chart or trading pattern refers to a shape that you can find on the price chart that gives you a predictive cue on what prices would be next based mainly on their past patterns.  By using reliable chart patterns, you can have a vantage point in the markets because trading patterns tend to be repetitive and predictable, so it’s easy to recognize each one over time.

Cryptocurrency – Reliable Trading Patterns

While trading patterns can be beneficial, entirely relying on them doesn’t guarantee that the market will move in your desired direction. The charts or trading patterns merely provide you with data that indicates the trends or direction of the asset price. Below are reliable trading patterns that can give you a cue on your next move:

Head and Shoulders

This chart pattern is dubbed the most reliable trading pattern in cryptocurrency. You can easily spot it with its bullish and bearish patterns with tiny peaks on both sides and the significant peaks appearing right in the middle.

This trading pattern becomes inherent when the market prices of stocks would significantly rise to a peak and then go downhill to the same level it has raised.

So, the chart would look like a peak to signify the rise of prices that would look higher than the last formed peak as it returns to its original base or neckline. This goes on again in the same pattern. You will also see the bearish reversal or downfall happening in a sequential pattern.

Simply put, the head and shoulders trading pattern have a large peak with smaller peaks on both sides. Traders look at this pattern to signify a bullish-to-bearish reversal.

Double Top

The double top trend gives away a bearish pattern. This highlights the end of an uptrend and signals a downtrend. The chart looks like this: the price would form a peak which then retracts to the base. The prices will climb up again and then go back to the neckline.

Double Bottom

This pattern is quite the opposite of the double top. It signifies a bullish reversal trend. With this trading pattern, the price would form a peak and then go back to its base or level of resistance. After that, the price begins another peak before it reverts to the prevailing trend.

Wedges

This chart pattern provides you with both bullish and bearish reversal trends. The wedges you’ll see are both rising and falling patterns. The rising wedges represent the bearish market, while the falling wedges are what a bullish market would look like.

You’ll see a continuation pattern formed when two trend lines intersect.  The two lines would represent support and resistance. With that in mind, the pattern signifies that the asset’s price will permanently move downward as it breaks through the neckline.

The falling wedge happens right in the middle of two diagonal patterns. First, the patterns show that an asset’s price will go up and break through the baseline.

Cup and Handle

The cup and handle pattern gives you a bearish picture before it goes bullish in motion. The cup looks like a round pattern. The price will move to a handle or temporary retracement with the cup. From thereon, the asset will move out of that phase and then continue to plummet towards a bullish trend.

Pennants

Also referred to as a flag pattern, the pennants happen following a sharp spike or movement in prices that show upward or downward trends.

A consolidation period then follows with connecting lines that create a pennant shape. When the extensive stocks move, a breakout happens in the same direction. Pennants would represent both bullish and bearish to point to either a reversal or continuation.

Ascending Triangles

When you see this pattern, you’ll know it gives away a bullish continuation pattern or a continuous uptrend. It’s all going up and good. The chart would appear to have a horizontal line with swing highs that signify resistance and then an ascending trend line alongside swing lows to show support. The trend would somehow break through the resistance at which you’ll see the uptrend going consistently.

Descending Triangles

With the descending triangles, the ascending pattern is that this shoots for the bearish patterns created at the onset of a downtrend. You will see the pattern of a downward slope and then break through the neckline, indicating the prevailing market trend dominated mainly by sellers. The trend eventually breaks and continues with the downturn.

Symmetrical Triangles

Symmetrical triangles refer to continuation charts or bilateral patterns formed when two lines are combined. The pattern can signify a bullish or bearish trend that varies depending on market variations.

Either way, the pattern connotes that the market will probably move in the same direction following a clear trend or pattern. However, if there are no clear trends, then anything can happen. Therefore, it is advisable to use symmetrical triangles in highly volatile markets with uncertainty in market price directions.

Decode and Trade with Confidence!

When you have trading patterns to follow, it will give you a better insight into making trading predictions. While technical analysis can strengthen your trading muscle, you should look into the latest news, trends, and market sentiments that affect market prices.

Crypto trading also considers government regulations, social media news or influences, and mining hash rates when looking into your trading strategy toolkit.

Spotting crypto trading patterns is mission-critical for any trader or investor. The trading patterns allow traders to know whether there is an uptrend or downtrend in the market and decode price reversals.