Crypto Trading 101: Simple Charting Patterns Explained

In the world of crypto trading, recognizing patterns can yield more than insights.

In short, patterns can be useful in determining which direction price is likely to go.

You should dedicate a decent amount of time in getting to know particular patterns that form during different time frames around the particular asset you are interested in.

The infamous head-and-shoulders pattern is a bearish reversal pattern that signals to traders that there's been a particular change in the current trend.

The cup-and-handle pattern is a bullish continuation sign identified by a "Bowl" or "Half round" cup that forms the basis of the pattern with relatively equal highs on either side of the edges.

The double-top pattern is one of the most recognizable and common charting patterns traders use to determine a change in a current trend.

The pattern forms when the price attempts to test a particular resistance level and gets rejected, then goes on to trade sideways for a bit before attempting yet another rally to the same resistance level whereby it is rejected a second time, sending prices into a deeper recession.

The pattern usually indicates a reversal in the current trend over a much longer period where traders can expect prices to continue to fall.

Remember, patterns are best used in conjunction with other indicators to add layers of confirmation to your analysis.

Charting patterns are generally best used in conjunction with other technical tools such as the Stochastic Oscillator.