$BTC $ETH Crypto trading can become more strategic and informed by using technical analysis tools and formations. Here are some important technical formations commonly used in this field:
1. Double Top Formation
Double Top Formation usually occurs at the end of an uptrend and indicates that the trend is about to reverse. This formation happens when prices reach the same resistance level twice and then decline.
Structure:
First Top: Prices rise in an uptrend and create a peak.
Pullback: Prices fall slightly and create a trough.
Second Top: Prices rise again and reach a level close to the first peak.
Neckline: A line connecting the trough between the two peaks.
Mechanism:
Price Drop: After the second peak, prices fall and break the neckline.
Target Price: The distance between the head and the neckline is used to estimate the minimum level the prices will drop to.
2. Double Bottom Formation
Double Bottom Formation occurs at the end of a downtrend and indicates that the trend is about to reverse. This formation happens when prices reach the same support level twice and then rise.
Structure:
First Bottom: Prices fall in a downtrend and create a trough.
Rise: Prices rise slightly and create a peak.
Second Bottom: Prices fall again and reach a level close to the first trough.
Neckline: A line connecting the peaks between the two troughs.
Mechanism:
Price Rise: After the second trough, prices rise and break the neckline.
Target Price: The distance between the neckline and the trough is used to estimate the minimum level the prices will rise to.
3. Triple Top Formation
Triple Top Formation occurs when prices reach the same resistance level three times and then decline, indicating a strong bearish signal.
Structure:
First Top: Prices rise in an uptrend and create a peak.
Pullback: Prices fall slightly and create a trough.
Second Top: Prices rise again and reach the first peak level, then fall.
Third Top: Prices rise again and reach the same level, then fall.
Neckline: A line connecting the troughs between the peaks.
Mechanism:
Price Drop: After the third peak, prices fall and break the neckline.
Target Price: The distance between the head and the neckline is used to estimate the minimum level the prices will drop to.
4. Triple Bottom Formation
Triple Bottom Formation occurs when prices reach the same support level three times and then rise, indicating a strong bullish signal.
Structure:
First Bottom: Prices fall in a downtrend and create a trough.
Rise: Prices rise slightly and create a peak.
Second Bottom: Prices fall again and reach the first trough level, then rise.
Third Bottom: Prices fall again and reach the same level, then rise.
Neckline: A line connecting the peaks between the troughs.
Mechanism:
Price Rise: After the third trough, prices rise and break the neckline.
Target Price: The distance between the neckline and the trough is used to estimate the minimum level the prices will rise to.
5. Flag and Pennant Formations
Bull Flag and Bear Flag formations indicate short-term consolidation periods following a strong trend movement.
Bull Flag:
Forms after an uptrend.
Shows a brief consolidation period followed by a continuation of the uptrend.
Bear Flag:
Forms after a downtrend.
Shows a brief consolidation period followed by a continuation of the downtrend.
6. Rising and Falling Wedge Formations
Rising Wedge and Falling Wedge formations indicate narrowing price movements that eventually break.
Ascending Wedge Formasyonu:
Rising Wedge:
Consolidation in an uptrend within a narrowing range.
Indicates a transition to a downtrend.
Falling Wedge:
Consolidation in a downtrend within a narrowing range.
Indicates a transition to an uptrend.
7. Symmetrical Triangle Formation
Symmetrical Triangle Formation occurs when prices move within a narrowing range, leading to an eventual breakout.
Structure:
Price movements narrow to form a triangle.
Expectation of a breakout as the apex of the triangle approaches.
8. Cup and Handle Formation
Cup and Handle Formation indicates a bullish continuation pattern where prices form a cup shape followed by a handle before continuing an uptrend.
Structure:
Cup: Formed by a smooth, rounded bottom.
Handle: Short-term consolidation following the cup.
9. Inverse Head and Shoulders Formation
Inverse Head and Shoulders Formation signals the end of a downtrend and the beginning of an uptrend.
Structure:
Left Shoulder: First trough.
Head: Lowest trough.
Right Shoulder: Second trough.
Neckline: Line connecting the peaks between the shoulders.
10. Bullish and Bearish Pennant Formations
Bullish and Bearish Pennant Formations indicate short-term consolidation periods and subsequent trend continuations.
Bullish Pennant:
Expectation of trend continuation after a brief consolidation.
Bearish Pennant:
Expectation of trend continuation after a brief consolidation.
