In trading, the camel shape is used to describe a price action that shows successive peaks and troughs resembling a camel’s hump. There are two common camel shapes:
1. Single Hump Camel:
Indicates that there is a single large peak in the price action.
This shape may indicate a temporary peak in an uptrend or downtrend before returning to the previous trend.
2. Double Hump Camel:
Shows two consecutive peaks with a slight dip in between.
This shape is a common sign of a reversal pattern known as a head and shoulders or double top, and usually indicates a potential reversal in the trend after the pattern is complete.
Uses in Trading:
Trend Analysis: Helps determine whether a trend will continue or reverse.
Entry and Exit Signals: Can be a clue as to when to enter or exit a trade.
Repetitive Patterns: Some traders rely on repetitive patterns as part of technical analysis, alongside other indicators such as RSI or MACD.
