4 Candle Patterns that helped me earn 1000$ from 90$. Heres how you can learn them too
In the world of trading, understanding and mastering certain chart patterns can be a game-changer. I started with $90, and by leveraging four specific candle patterns, I managed to turn it into $1,000. In this article, I’ll walk you through the four key patterns that helped me achieve this: Double Top, Double Bottom, Triple Top, and Triple Bottom.
1. Double Top
The Double Top pattern is a bearish reversal pattern that typically forms after a sustained uptrend. It consists of two peaks that form at nearly the same level, resembling an "M" shape. This pattern indicates that the market has tried twice to break through a resistance level but failed, suggesting a potential reversal to the downside.
How to Trade the Double Top:
- Entry Point: Once the price fails to break the resistance level for the second time and starts moving downwards, you can enter a short position.
- Confirmation: Wait for a break below the neckline, which is the lowest point between the two tops, to confirm the pattern.
- Stop-Loss: Place your stop-loss just above the resistance level or the second top.
- Profit Target: Measure the height from the top to the neckline and project that distance downward from the breakout point to set your profit target.
2. Double Bottom
The Double Bottom pattern is the opposite of the Double Top and is a bullish reversal pattern. It appears after a downtrend and consists of two lows forming at nearly the same level, resembling a "W" shape. This pattern signals that the market has attempted twice to break through a support level but failed, indicating a potential upward reversal.
How to Trade the Double Bottom:
- Entry Point: Enter a long position when the price breaks above the neckline, the highest point between the two bottoms.
- Confirmation: Look for increased volume during the breakout to confirm the pattern.
- Stop-Loss: Set your stop-loss just below the support level or the second bottom.
- Profit Target: Calculate the height from the lowest point to the neckline and project it upward from the breakout point to determine your profit target.
3. Triple Top
The Triple Top pattern is a more extended bearish reversal pattern formed after an uptrend. It consists of three peaks, all at roughly the same level, indicating strong resistance and a potential reversal to the downside. The pattern looks like three mountains in a row.
How to Trade the Triple Top:
- Entry Point: Enter a short position when the price breaks below the support level, or the "neckline," formed by the lowest point between the peaks.
- Confirmation: Ensure that the price breaks through with significant volume to validate the pattern.
- Stop-Loss: Place a stop-loss above the third peak to protect against a false breakout.
- Profit Target: Measure the height from the peak to the neckline and project that distance downward from the breakout point for your profit target.
4. Triple Bottom
The Triple Bottom pattern is a bullish reversal pattern that forms after a downtrend, consisting of three lows at about the same level. This pattern suggests strong support and indicates that the market may reverse to the upside. It resembles three valleys side by side.
How to Trade the Triple Bottom:
- Entry Point: Enter a long position once the price breaks above the resistance level or the neckline.
- Confirmation: Look for a volume increase during the breakout for stronger confirmation.
- Stop-Loss: Set your stop-loss below the third bottom to safeguard against a false breakdown.
- Profit Target: Measure the height from the lowest point to the neckline and project it upward from the breakout point to determine your profit target.
Conclusion
Mastering these four candle patterns—Double Top, Double Bottom, Triple Top, and Triple Bottom—can significantly enhance your trading skills and profitability. Each pattern provides clear entry and exit points, making them effective tools for both new and experienced traders. Remember, while these patterns can be powerful, always combine them with other indicators and risk management techniques to improve your trading success.
Start small, practice often, and soon you'll find yourself turning $90 into $1,000 too