Continuation patterns: Guide for day traders in cryptocurrency
As a trader, you are constantly looking for patterns that can help in making informed investment decisions. One of the most effective ways to do this is the study of continuation patterns in cryptocurrency markets. In this article we will delve into what are the following patterns of continuation, how they work, and we provide observations specially adapted to traders.
What are continuation patterns?
Continuing patterns relate to a number of technical indicators that are created when the price of assets lasts in a certain range or channel after its explosion. These patterns can be used to identify potential trends, reverse and confirm. In the context of cryptocurrency markets, the continuation patterns use the natural market trend to return to its average reversal.
Types of continuation patterns
There are several types of continuation patterns used by traders:
- Head and arms (H&S) : A classic pattern in which the price creates a head and arms, and then a decrease to low.
- A inverted head and arms : similar to H&S, but with an inverted shape, often indicating reversal.
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- Medical convergence patterns (MacD) : Connection of MACD signals and continuation patterns to confirm trends.
how to identify continuation patterns in cryptocurrency
To see the continuation patterns on cryptocurrency markets, follow the following steps:
- Choose the correct cryptocurrency : Focus on popular cryptocurrencies such as Bitcoin, Ethereum or Altcoins.
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- Connect with other indicators : Use continuation patterns in combination with other technical analysis tools, such as momentum and variability indicators.
How do the continuation patterns work
Continuing patterns work by:
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Example: a model of continuation of bitcoins
Suppose you look at the Bitcoin price table and notice a strong breakthrough over the upper Bollinger team. This may indicate that the market will probably develop, creating a continuation pattern.
* The initial breakthrough : The price is poured from the channel, which indicates a new high level.
* Trends resistance
: The price creates a level of resistance of the trend line (e.g. 40,000), above which it can test and potentially reverse.
* The continuation pattern : If the price continues to grow, you can see the next formation of the continuation pattern, such as the inverted head and upper arms or continuation of the range of the range.
Application
Continuing patterns are a powerful tool for day traders on cryptocurrency markets. By identifying these patterns, you can get insight into market trends and make more conscious investment decisions. Remember to always combine technical analysis with risk management strategies and adapt your approach to specific market conditions.
In this guide, we discussed the basics of continuation patterns in cryptocurrency markets.