Reversal BTCUSD Trading Patterns
These patterns are formed after the btcusd trading market has had an extended move up or down and the bitcoin price reaches a strong resistance or support respectively.
When bitcoin price reaches such a point it starts to form a pattern. Since these formations are frequently formed it's easy to spot them once you learn how & begin using them. There are four types:
- Double Top
- Double Bottom
- Head & shoulders
- Reverse Head and shoulders
This learn bitcoin trading tutorial will only cover double tops and bottoms, for the other 2, read this other tutorial: head & shoulders and reverse head & shoulders
Double Tops
This is a reversal bitcoin pattern that forms after an extended upwards cryptocurrency trend. As its name implies, this formation is made up of 2 consecutive peaks that are roughly equal, with a moderate trough between.
This formation is considered complete once bitcoin trading price makes second peak & then penetrates lowest point between highs, called the neckline. The sell cryptocurrency signal from this formation occurs when the btcusd trading market breaks below the neck-line.
In Bitcoin, this formation is used as a early warning signal that a bullish bitcoin trend is about to reverse. However, it is only confirmed once the neckline is broken and the btcusd trading market moves below neckline. Neckline is just another name for the last support level formed on the Bitcoin chart.
Summary:
- Forms after an extended move upwards
- This formation indicates that there will be a reversal in btcusd trading market
- We sell when bitcoin price breaks below the neck line point: see below for explanation.
The double top look like an M-Shape, the best reversal cryptocurrency signal is where the second top is lower than the first one as shown below, this means that the reversal can be confirmed by drawing a downward bitcoin trend line as shown below. If a trader opens a sell cryptocurrency signal the stop loss will be placed just above this downward bitcoin trend line.
M Shaped
Double Bottom
This is a reversal bitcoin pattern that forms after an extended downwards cryptocurrency trend. It is made up of 2 consecutive troughs that are roughly equal, with a moderate peak between.
This formation is considered complete once bitcoin trading price makes second low & then penetrates the highest point between lows, known as the neckline. The buy indication from this bottoming out signal occurs when the btcusd trading market breaks the neck line to the upside.
In Bitcoin, this formation is an early warning trading signal that the bearish bitcoin trend is about to reverse. It's only considered complete/confirmed once the neck line is broken. In this formation the neckline is the resistance level for the bitcoin price. Once this resistance is broken the btcusd trading market will move up.
Summary:
- Forms after an extended move downward
- This formation indicates that there will be a reversal in btcusd trading market
- We buy when bitcoin price breaks above the neck line point: see below for explanation.
The double bottom pattern look like a W Shape, the best reversal cryptocurrency signal is where the second bottom is higher than the first one as shown below, this means that the reversal can be confirmed by drawing an upwards bitcoin trend line as shown below. If a trader opens a buy cryptocurrency signal the stop loss will be placed just below this upward bitcoin trend line.
W Shaped
