Bilateral/Consolidation Cryptocurrency Chart Patterns Bitcoin Trading

With bilateral/consolidation bitcoin trading patterns the btcusd trading market can move in any direction. There are two different types of consolidation chart patterns that form on charts:

• Symmetric Triangles - Consolidation chart patterns
• Rectangles - Range/ranging market

Consolidation BTCUSD Patterns

Symmetrical triangles are cryptocurrency chart patterns with converging trend lines that form a consolidation period. The technical buy point from a symmetrical triangle is the upside break, while a downside break is a technical sell signal. Ideally, a market breaks out from a symmetrical triangle prior to reaching apex of the triangle.

Bitcoin Trendlines can be drawn connecting the lows and highs of the consolidation phase, the trend lines formed are symmetric and converge to form an apex. A breakout should occur somewhere between 60-80% into the triangle chart pattern. An early or late breakout is more prone to failure, and therefore less reliable. After a price breakout the apex forms support and resistance levels for the price. Price that has broken out of the apex should not retrace past the apex. The apex is used as a stop loss setting area for the open Bitcoin trades.

When these consolidation patterns form we say that the btcusd market is taking a pause before deciding which is the next direction to take.

These consolidation patterns form when there is a tug of war between the buyers and the sellers and the btcusd market can't decide which way to continue.

Consolidation Chart Pattern

However, this pattern cannot go on forever and just like in a tug of war one side eventually wins, looking at the cryptocurrency chart below see how the consolidation eventually had a breakout and moved in one direction. Now how do we make sure that we are on the winning side?

Break out Downward Sell Bitcoin Signal after a Consolidation

Breakout Upwards Buy Bitcoin Signal after a Consolidation

Now back to our question, how do we make sure we are on side that's winning?

Well we wait until price moves past one of the lines and put buy or sell orders in that direction. After consolidating, If price breaks-out the upper line we buy, if it breaks-out the lower line we sell.

Alternatively if you do not want to wait out the consolidation, you can use pending orders. If you would like to know more about pending orders go to the topic: Stop Entry Bitcoin Order Types

The two types of stop order types used to trade consolidation bitcoin trading patterns are:

• Buy Entry Stop An order to buy at a level above btcusd trading market price.

• Sell Entry Stop An order to sell at a level below btcusd trading market price.

These are cryptocurrency orders to buy above the btcusd market or to sell below the btcusd trading market.

Rectangle Trading Pattern

A rectangle consolidation pattern is a trading range with narrow price action which forms a consolidation phase in btcusd market. The trading range is defined by two parallel trend lines which are horizontal and indicate the presence of support & resistance. This pattern is drawn on a chart using a rectangle, hence the name rectangle chart pattern.

For this consolidation chart pattern, price forms multiple highs and lows that can be connected with horizontal trend lines that are parallel to each other. This pattern forms over an extended period of time giving the pattern its rectangle shape.

A breakout of price action from this consolidation pattern occurs when either of the horizontal line is penetrated & the trading range of this rectangle is broken. An upside breakout is a buy signal. A downside breakout is a sell bitcoin signal.

Rectangle Pattern Cryptocurrency - Consolidation Pattern

Price Breaks the consolidation range after sometime & continues to move upwards after an upward market breakout.