How to identify investment patterns in cryptocurrency price graphics
The world of cryptocurrency has been marked by rapid price and volatility fluctuations. As a result, merchants and investors have become increasingly dependent on technical analysis tools to make informed decisions about the purchase and sale of assets. Among the various indicators and patterns that can be used to predict reversals is the identification of reversion patterns in price graphics.
What are reversal patterns?
A reversal pattern is a specific combination of price movements and price levels that indicate a possible point or reversal in the market trend. In other words, it is a sign that the bullish trend or the bearish trend may be ending, and a new trend is about to begin.
Types of investment patterns
There are several types of investment patterns that can be identified in cryptocurrency price graphics, which include:
- Head and shoulder pattern (H&S) : A classic investment pattern characterized by three peaks and a channel.
- Inverse head and shoulder pattern (IHS) : Similar to H&S, but with an inverse relationship between peak and channel levels.
- Upper/lower double pattern : Two high -timer minimums or two consecutive low maximums.
- Hammer pattern : An investment pattern characterized by a small price movement followed by a great movement in the opposite direction.
How to identify investment patterns
To identify investment patterns, merchants use various tools and techniques of technical analysis, which include:
- Graphics software : programs such as Metatrader, Ctrader and TrainingView allow users to create and visualize price graphics.
- Time frame analysis : Operators analyze the chart time frame (for example, 1 hour, 4 hours, daily) to identify patterns that may indicate reversions.
- Mobile averages (MAS) : Merchants use more to identify trend reversions analyzing their relative force (for example, stochastic oscillator).
- Support and resistance levels : Merchants seek support or resistance areas where prices have historically been reversed.
Identification of investment patterns
Here are some tips on how to identify investment patterns in cryptocurrency price graphics:
- Pay attention to changing trends : Observe when the trend is reversed, often accompanied by a change in the feeling of the market.
- Look for consolidation periods : Identify areas where prices have been consolidated or reluctant before continuing their previous trend.
- Monitor graphic indicators : Use tools such as RSI (relative resistance index), bollinger bands and stochastic oscillator to identify potential reversions.
- Be attentive to key levels
: Monitor the price action at significant support and resistance levels.
Example of investment patterns in cryptocurrency price graphics
Let’s analyze the example of the Bitcoin (BTC) price table from 2016 to 2021, highlighting several investment patterns:
| Time frame | Trend | Support/resistance |
| — | — | — |
| 2016-2017 | Trend up | $ 16.00- $ 19.50 |
| 2018-2019 | Trend down | $ 3.50- $ 4.20 |
| 2020-2021 | Trend up | $ 33,000- $ 35,000 |
In this example, we can see that the price of Bitcoin rose to the resistance level of $ 16.00- $ 19.50 (2016-2017), indicating a possible investment pattern. Later, in 2018-2019, the price fell to the support level of $ 3.50- $ 4.20, which suggests a new trend.
Conclusion
Identifying investment patterns is crucial for trade and investing success in cryptocurrency markets. When paying attention to graphics indicators, time frame analysis and key levels, merchants can identify possible reversions before rooting. Remember to closely monitor changing trends, consolidation periods and support/resistance levels to make informed decisions about the purchase and sale of assets.