Short-term trading can yield significant profits if you master how to identify reliable patterns. Understanding these patterns will help expected trades go in the direction of the price and make quick decisions, especially in highly volatile markets. Below is a detailed guide on some reversal patterns and their subsequent effects, helping you earn at least $40 each day.

1. Double Bottom and Double Top

Classic reversal patterns:

  • Double Bottom:
    This is a reversal sign from a downtrend to an uptrend. When the price forms two equal bottoms (almost the same) and then breaks through the resistance level, this is a buy signal.

  • Double Top:
    This is a reversal sign from an uptrend to a downtrend. When two different successful price levels are created and then the support level is broken, this is the time to sell.

2. Bull Flags and Bear Flags

The next model focuses on quick trading:

  • Bull Flag:
    Appears in an uptrend, with a temporary accumulation phase before the price continues to rise. The entry point is when the accumulation is broken to the upside.

  • Bear Flag:
    Appears in a downtrend, when the price accumulates before continuing to drop. The entry point is when the price breaks the accumulation to the downside.

3. Head and Shoulders and Inverse Head and Shoulders

Reversal pattern effect:

  • Head and Shoulders:
    This is a bearish reversal signal. The price forms a highest peak (head) between two lower peaks (shoulders). When the price breaks through the neckline, this is a sell signal.

  • Inverse Head and Shoulders:
    A bullish reversal signal. The price forms a lowest bottom (head) between higher bottoms (shoulders). When the price breaks above the neckline, this is an opportunity to buy.

4. Ascending Triangle and Descending Triangle

Pattern signaling incidents:

  • Ascending Triangle:
    This is the next model in a bullish trend, with higher lows pushing towards resistance. When the price breaks through the resistance zone, buy.

  • Descending Triangle:
    This is the next model in a bearish trend, with support levels declining towards the support zone. When the support zone is broken, sell.

5. Bullish Flag and Bearish Flag

The next model is similar to the flag but sharper:

  • Bullish Flag:
    Appears after a strong uptrend, with a triangular accumulation phase. When the price breaks through this triangle, the uptrend continues.

  • Bearish Flag:
    Appears after a strong downtrend, with a triangular accumulation phase. When the price breaks the triangle, the downtrend continues.

Professional tips for success

  • Use 5-minute charts:
    5-minute charts provide quick and accurate information for short-term trading.

  • Volume analysis results:
    Increased trading volume when patterns break out is a significant confirmation signal.

  • Stop Loss Settings:
    Set the stop loss just below or above the critical level of the pattern to minimize risk.

  • Practice regularly:
    Trade with a demo account to familiarize yourself with the previous patterns when trading with a real account.

Summary

Mastering candle patterns like Double Bottom, Bull Flag, Head and Shoulders, or Triangle can help you take advantage of small but frequent price movements to generate stable income. With the right strategy and high discipline, the goal of earning $40 a day is entirely achievable.