Guys, how can I tell you about 8 patterns that help determine the market direction and can increase your chances of success in trading? Let's explain them step by step.
1 Head and Shoulders
This is a pattern that appears when the market is bullish and then starts to fall. We see 3 peaks: the middle peak (the head) is higher, and the side peaks (the shoulders) are lower. After the price breaks the neckline (the line below the peaks), this is a signal that the trend will reverse. Be careful with the volume. If there is an increase in selling pressure at the break, the signal will be stronger.
2. Double Top
When the market ends an uptrend and starts to go down, we see two peaks at almost the same level, and then the price starts to go down.
Use the Relative Strength Index (RSI) to confirm if the market is in an overbought zone.
3. Double Bottom 📈
This is the opposite of the double top, which occurs when the market is falling and starts to rebound. We see the price testing the support twice and then starting to rise.
The strategy is after the price breaks the resistance between the two bottoms, enter the buy.
If you have divergence in the MACD indicator, this confirms the strength of the signal.
4. Triple Top
This is a stronger pattern than the double top, when the market is bullish and then goes up 3 times in the same area and then starts to fall.
Larger time frames (such as 4-hour or daily) give stronger signals.
5. Triple Bottom
This is the opposite of a triple top, which occurs when the market is down and then tests the same level 3 times before rising.
Strategy: After the price breaks the resistance, enter and buy.
Keep an eye on the trading volume, if there is an increase in volume with the break, the signal will be stronger.
6 Rounded Top
This is a slow bearish pattern that occurs when the market forms a curve like an inverted bowl, and then gradually starts to decline. If the volume starts to decrease with the break, this increases the strength of the signal.
7. Rounded Bottom
This is like a circular top but in reverse. It happens when the market is down and then a rising bowl-like curve begins to form.
Strategy: After breakout, I buy.
Tip: This is often the beginning of a big market rally, great for long term trading.
8. Cup and Handle
This is a continuation pattern that appears when the market forms a “U” shaped cup, and then a small handle appears before breaking the resistance and starting to rise.
Strategy: After the price breaks the resistance in the handle area, I buy.
Keep in mind that if the cup reaches a drawdown level between 50%-61.8% of its height, this is an excellent entry point.
How to use these patterns effectively
Use other tools like RSI and MACD indicators to confirm the signal validity.
Time frames Patterns on larger time frames (such as 4 hours or daily) are more reliable.
Pay attention to the volume. If there is an increase in volume during the break, this means that the upcoming trend is strong.
Stop trading in the future, it's all about destroying homes, my friend. Trade and trade money, and you can lose it.
By following these patterns, you will be more prepared for strong opportunities in the market.
I hope the information is useful and enjoyable for you. Of course, my friend, as you know, this is not financial advice.
