How to identify the reversal models in the graphic designers of the cryptocurrency
The world of cryptocurrency has been marked by rapid prices of prices and volatility. Consequently, traders and investors have become increasingly dependent on the technical analysis tools to make informed decisions on the purchase and sale of activities. Among the various indicators and models that can be used to predict reversal there is the identification of the reversal models in the price graphs.
What are the reversal models?
An inversion model is a specific combination of price movements and price levels that indicate a potential turning point or reversal in the market trend. In other words, it is a signal that the upward tendency or the downward tendency could end and a new trend is about to start.
Types of inversion models
There are different types of reversal models that can be identified in the graphs of cryptocurrency prices, including:
- head and shoulders (h & s) pattern : a reason for classic inversion characterized by three peaks and a depression.
- Reverse head and shoulders (IHS) Pattern : similar to H&S, but with an inverse relationship between the peak and depression levels.
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- Matello model : an inversion model characterized by a small price movement followed by a large move in the opposite direction.
How to identify the inversion models
To identify the reversal models, the traders use various technical analysis tools and techniques, including:
- Software for graphic : programs such as Metatrader, Ctrader and TradingView allow users to create and view prices.
- Analysis of the period of time : the traders analyze the period of time of the graph (e.g. 1 hour, 4 hours, per day) to identify the models that can indicate the inversions.
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- Support and resistance levels : traders are looking for support areas or resistance in which prices have historically reversed.
Identification of inversion models
Here are some suggestions on how to identify the reversal models in the graphs of the policy prices:
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- Search periods of consolidation : identify the areas where prices have consolidated or reversed before continuing their previous trend.
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- keep an eye on the key levels : monitor the action of prices at significant levels of support and resistance.
Example of reversal models in cryptocurrency prices
We analyze the example of the graphic designer of Bitcoin prices (BTC) from 2016 to 2021, highlighting different reversal models:
| 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 Bitcoin price went to the level of resistance of $ 16.00- $ 19.50 (2016-2017), indicating a potential reversal model. Later, in 2018-2019, the price dropped to the support level of $ 3.50- $ 4.20, suggesting a new trend.
Conclusion
The identification of the inversion models is crucial for the trading and the investment of success in the cryptocurrency markets. Paying attention to the indicators of the graph, to the analysis of the times and the key levels, operators can identify potential inversions before being rooted. Remember to keep an eye on the changing trends, the periods of consolidation and the support/resistance levels to make informed decisions on the purchase and sale of activities.