Continuation patterns: A guide for traders on the cryptocurrency market
The world of cryptocurrency is known for its volatility and unpredictability, which makes it a difficult market for day traders. However, understanding of continuation patterns can ensure valuable insight into price movements and help traders make informed decisions. In this article, we will examine what are the continuation patterns, how they work, and some key strategies to include them in your trade approach.
What are continuation patterns?
Continuing patterns refer to a specific type of technical analysis pattern that appears when the trend is broken or rejected in favor of another. These designs are often characterized by “bent” or curved shape, which indicates that the price is trying to break free from the previous resistance zone or support area.
Types of continuation patterns
There are several types of continuation patterns, including:
- Head and arms : A classic pattern in which high and low prices form a “head” and “arm” respectively.
- Reverse head and arms : the opposite version of the head and shoulder pattern in which the “head” is above the “arm”.
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- Break of trend line : When the trend line is broken and new high prices are created.
how to identify continuation patterns
To identify continuation patterns, you need to analyze various technical indicators, such as:
- Medium walking (masses) : The average price of a coin in a certain period can help identify trends, resistance and support.
- Relative strength indicator (RSI) : RSI measures the size of recent price changes to determine the terms purchased or sold out.
- Bollinger teams : These teams emphasize variability and ensure an indication of market moods.
Key strategies for including continuation patterns to the trade approach
After identifying the continuation pattern, here are some key strategies to include it in the commercial approach:
- Take profit : Set the profit level based on a breakthrough or when the price reaches a specific goal.
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- Continuation of trade : Use the continuation patterns as a trigger to introduce new transactions, such as buying or selling coins based on a specific pattern.
Example of a continuation pattern in action
Consider an example in which we identify the opposite head and shoulder pattern in Bitcoin (BTC/USD) for USD 28,000. We note that the price is a “head” above the previous level of resistance (USD 29,500), and then the “arm” below (27,800 USD). However, if we pull out this pattern, we can use the growing rush and enter a long position.
Application
Continuing patterns are an indispensable tool for day traders to get insight into the prices of cryptocurrency market. Understanding these patterns and including them to a trade approach, you can make more conscious decisions and increase your chances of success. Remember to always use risk management techniques and remain disciplined when entering the transaction.
Additional resources
For further learning, here are some recommended resources:
* Cryptoslater : Website dedicated to cryptocurrency, analysis and observation.
* CoINDesk : A leading online publication for cryptocurrency messages and trends.
* Tradingview
: Platform offering charts in real time, technical indicators and commercial ideas.
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