Chart Pattern in Trading: Here's a Guide to Understanding It!

Bittime - Learn about crypto, a decentralized digital asset that allows storing, sending, and receiving value without a central bank. This article explains how crypto works, its history, legality, and future prospects in the ever-growing crypto industry.

What is meant by Chart Pattern in Trading?

One type of price movement that can be used to identify upward and downward trends is chart patterns. Traders use technical analysis as a tool to create trading strategies in more accurate markets that they can predict. Price movement formation using a series of curves and/or trend lines. Trend lines connect a series of peaks or valleys.

In general, the two trading patterns are reversal and continuation. However, some people add bilateral patterns, which is a third type of trading pattern. Continuation patterns indicate that a trend will almost certainly continue in the same direction, while reversal patterns indicate that the trend will change direction. At the same time, bilateral chart patterns indicate asset prices.

What is included in the Pattern Reversal Chart?

There are four types of reversal patterns, namely wedge, head and shoulder, double top/bottom, and gap. The following is a review of the reversal pattern chart:

Wedges

In crypto trading, wedge chart patterns can be continuation or reversal patterns. They have two converging trendlines, similar to a pennant, but the wedge is created as both trendlines move up, either up or down. A bullish (downward sloping) wedge indicates a pause during an uptrend or downtrend; A bearish wedge (upward angle) indicates a brief interruption during an uptrend or downtrend.

Head and Shoulder

The head and shoulders pattern can appear at the highest or lowest market prices. This chart pattern consists of three consecutive peaks or valleys. In a rising market, the head and shoulders pattern can cause a downtrend or trend reversal. In a falling market, an inverted head and shoulders pattern is more likely to cause an uptrend reversal.

Double Top dan Double Bottom

The crypto pattern known as a double top is a reversal pattern that indicates where the market has failed twice to break through a support or resistance level. This pattern resembles the letter M, with a first push into a resistance level followed by a failed second attempt, which often leads to a trend reversal.

Gap

Unlike regular crypto trading patterns, gaps consist of a comparison of two candlesticks rather than lines. This reversal chart pattern usually appears when news or events attract many sellers or buyers to an asset. Thus, prices can rise significantly higher or lower than the previous day's closing price.

Conclusion

Traders use chart patterns, also known as chart patterns, as an important tool in technical analysis to predict future price movements. These patterns are usually divided into two main categories: reversal and continuation, although some analyzes also include a bilateral category. 

With various formations such as wedges, head and shoulders, double top/bottom, and gaps, reversal patterns indicate a possible change in trend direction. Wedges can be bullish or bearish and indicate a break or disruption in an existing trend. The head and shoulders pattern, which consists of three peaks or valleys, can indicate a reversal in an up or down trend. 

The double top and double bottom pattern indicates the market's failure to penetrate the resistance or support level, so the market cannot continue. However, divergence occurs when the asset price rises or falls.

How to Buy Crypto on Bittime

You can buy and sell crypto assets easily and safely via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also ensure you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Study Complete Guide How to Buy Crypto on Bittime. 

Monitor graphic movement of Bitcoin (BTC) price, Ethereum (ETH), Solana (SOL), and other cryptos to find out today's crypto market trends in real-time on Bittime.