There are all sorts of fancy names and indicators when it comes to chart patterns and technical analysis. Names DO NOT matter. It’s what they are telling you that matter.
You need to learn to speak the language of the markets. If you can understand what the market is saying, you will be able to take money from it when the market makes it available. That is all that really matters.
When it comes to chart patterns and technical analysis, I am only concerned with 2 chart patterns: the reversal pattern and the continuation pattern. As for the technical analysis, I only use a few basic indicators, the MACD, moving averages and Fibonacci retracements.
Understanding price action and trends is also a critical part of being a successful crypto trader. You must understand what the market is telling you. This knowledge, combined with some good strategies, will help you succeed.
Let’s break it down so you can better understand the chart patterns and technical analysis that I use to create Wealth with Crypto.
Understanding trends is one of the most important things you need to learn as a trader. There are only three options for a trend. Remember, if it’s not clear, it’s not there.
- Up Trend – Has higher highs & higher lows = HL,HH
- Down Trend – Has Lower highs & lower lows = LH,LL
- NO Trend
An uptrend is simply a series of higher highs and higher lows.
The bulls are said to be in control in an uptrend. If there is more demand, buyers will bid more than the current price, and, as a result, the price will rise.
Is just the opposite of an uptrend. A series of lower highs and lower lows.
The Bears are in control. If there is more supply, sellers are forced to ask less than the current price, causing the price to fall.
If the market is not clearly trending in one direction, there is NO trend. This is when you see sideways, choppy action in the market. There is no clear direction. Neither the buyers nor sellers are in control. The market is undecided.
I like to wait for a clear trend to form in a sideways market before I place a trade. I personally like to have the daily chart in agreeance with the timeframe I am trading on. If the daily chart were in an uptrend, I would not take a short on any timeframe. I would only be looking for long trades.
Support & Resistance
I do use support and resistance lines on my charts but only horizontal ones. I DO NOT use sloping trend lines. They are too subjective. I need at least two touches on a horizontal level for it to be considered support or resistance. Three or more touches are better.
The Reversal Pattern
Reversal patterns do as the name suggests. They can point out a possible reversal. You will hear them called all sorts of names but who really cares. Most people have no idea what the idea behind a chart pattern is, and therefore they lose money no matter what they do—names DON’T matter TREND MATTERS.
The double bottom is just a change of trend or reversal pattern. In the example below, you can see that the market was in a downtrend. It then made a higher low (the double bottom) and a higher high. At that point, there was a trend reversal.
You can also have the opposite, which is called a double top but remember the names don’t matter. It is just a change of trend.
Head and Shoulders
The head & shoulders is just another reversal pattern or a change of trend.
You can see in the example that the price was in an uptrend. It then made a lower high (the right shoulder), and when it broke the neckline and made a lower low, that is the point when the trend changed.
You can also have the opposite, which would be called an inverted Head & Shoulders, but you DO NOT need to know this. It is just a trend reversal.
You can forget all the names. You do not need them. You only need to know Trend. Is it in an uptrend or a downtrend?
The Continuation Pattern
Continuation patterns hint that the trend may continue in the same direction that it has been travelling in.
Ascending & descending triangles, Pennants, Symmetrical triangles. Consolidations, Bull and bear flags. Names DON’T matter. You need to understand what the price is telling you, and that is all. What are all these price patterns telling you?
It’s telling you there is a breakout, a continuation, be it up or down. The Bitcoin Breakout is a strategy that I use when price is consolidating. It is built around a horizontal level like in this example.
It does not matter what it is called. You just need to understand Price Action and learn what the market is telling you. You need to learn to Trade what you see, Not what you Think.
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Trading does not have to be complicated. You don’t need to learn all the names of the patterns. You just need to understand the trend and price action. Learn what the market is telling you, and it will make money available to you, and you will know when to take it.
You can get as involved as you want in chart patterns and technical analysis, but you don’t need to know it all to be a successful crypto trader at the end of the day. The best way to learn what you DO NEED is to sign up for the Free Trader Cobb Course.
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Chart patterns and technical analysis does not have to be hard. Trading crypto does not have to be hard. If you start with the free become a trader course, you will learn the basic needed to be successful.
You will not learn all the fancy chart patterns and names. You will learn what matters, and that is all. If you have been sitting on the fence or waiting to get into the crypto game, NOW is the time to start. Try the free course out and see what it is all about. It might just be what you have been looking for, and remember…
Be the Best you can Be
! DISCLAIMER: I am not a financial advisor. This is not financial advice. The content and material I provide on 2dsirecrypto.com is my opinion only and general in nature. Always do your own research before investing any money. You should always understand the risks involved in trading and investing and seek advice from licensed professionals before undertaking any investments of your own.