This article is a continuation of several previous articles providing basic informations regarding technical analysis. Mastering T.A enables the trader to predict price movements, achieve good entries, prevent losses and decrease the risk of each trade. Please remember to read our previous articles to have a general idea of T.A. The link below is to our 3rd article in this blog regarding ATR, EWT and Fibonacci.
In this article we are going to discuss and provide the viewers with several patterns, commonly seen on a chart, each pattern provides a signal regarding the next move on the market. Some patterns are oftenly seen and others are rare to be seen.
In the image below, you can see the most common patterns, this is considered as a cheat sheet of the market. Remember that each pattern must be drawn by the trader. Doing a lot of drawing helps the trader identify the patterns easily.
1. Ascending Triangle
Is one of the most common patterns, seen when a specific coin or stock hold the same levels of highs, acting as a resistance, and providing higher lows by time, the coin will most probably break out of the triangle in an upward direction.
2. Descending Triangle
Is the inverse of the ascending triangle, providing lower highs and the same lows acting as a support until breaking the support line downward.
3. Symmetrical Triangle
Provides lower highs, and higher lows until breaking upward.
4. Pennants and Flags
This pattern is identified during a specific trend, first you need to identify the trend. Also considered as a mild correction before continuation of a trend, but acting in a parallel channel.
Wedges are commonly seen, an ascending wedge provides higher highs and mild higher lows, and will lead to a breakout to the downside. Meanwhile the descending wedge commonly finishes with a breakout to the upside.
6. Tops and Bottoms
Tops will be considered as a strong resistance area tested for more than once, leading to the retracement of the price to previous lows. Bottoms are strong support areas tested and will lead to a new pump. Bottoms can be considered as a good entry for longs depending on the general trend.
7. Head and Shoulders
This pattern is one of the most patterns commonly seen. To be able to identify H&S Pattern, we recommend observing the chart on 1hour and 4hrs timeframe. First you need to identify the head and shoulders, then identify the neck of the pattern to set proper targets. In the image below you can observe a clear H&S Pattern.
This was a brief summary to the most common patterns. In our next article we will provide all the viewers with our strategy for entries. The strategy made on Binance Futures more than 197% profit in 1 month.
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