Bitcoin Trendline Break

After price has moved in a certain direction for an extended period of time within a channel it reaches a point where it stops moving within the channel. When this happens we say that the trend line has been broken.

Since the line is point of support or resistance then we expect the btcusd trading market to move toward the opposite direction. When this happens traders will close the orders which they had bought or sold. This is referred to as taking profit.

Up Bitcoin trend Reversal

When price breaks-out upwards line (support) the btcusd trading market will then move down

This signal is considered to be complete with the creation of lower high or lower low. This also provides a trading opportunity to go short once it's broken.

Down Bitcoin trend Reversal

When price breaks-out downward line (resistance) the btcusd market will then move up

Downward Channel break

This trading signal is considered to be complete with creation of a higher low or higher high. This also provides a trading opportunity to go long once it's broken.

NB: Sometimes when price breaks its trend it might first of all consolidate before moving in the opposite direction. Either way it is always good to take profit when the btcusd trading market direction reverses.

To trade this trading setup as a trader once you open a new trade in direction of the trend reversal the price should immediately move in that direction, in a price breakout manner. This means that the btcusd market should immediately move in that direction without much of a resistance.

If on the other hand the btcusd market does not immediately move in direction of the price breakout then it is best to close out the trade because it means that the trend is still holding.

Another tip is to wait for the trend line to be broken and for the btcusd trading market to close above or below it so as to confirm this bitcoin trade signal.

What happens is that most traders open trades waiting for a reversal even before the trend is broken, only for the price to touch this line and for the current market direction to hold and bitcoin to continue with the current market direction.

Therefore, when trading this cryptocurrency trading setup it is better to wait until the breakout has been confirmed by price closing above or below the trendline, depending on the direction of the market.

• Upward Market Direction Reversal - this signal is confirmed once the btcusd market closes below this upward line, this should be the correct time to open a sell short trade, so as to avoid a bitcoin trading whipsaw.

• Downward Market Direction Reversal - this cryptocurrency signal is confirmed once the btcusd market closes above the downward line, this should be the correct time to open a buy long trade, so as to avoid a bitcoin trading whipsaw.

Combining with Double Tops or Double Bottoms Bitcoin Chart Patterns

A good trade setup to combine this trading setup with is the double tops and double bottoms chart patterns. Read Double Top and Double Bottom Chart patterns Tutorial.

This setup should already have formed before the trend break signal. Because these double tops and double bottoms are also reversal cryptocurrency trading signals, then combining these 2 setups will give the trader a good probability of avoiding a bitcoin trading whipsaw.

In the above chart screenshots these bitcoin trading setups can be confirmed to have formed even before the reversal signal popped up.

First Example of Upwards Direction Reversal - the Double tops pattern had already formed before the trend break signal appeared on the chart.

Second Examples of Downwards Direction Reversal - the Double bottoms bitcoin trading pattern had already formed before the trend break signal appeared on the chart.

Double Top or Double Bottoms Combined with other Reversal Signals