โWelcome to Part 3! In our previous posts, we looked at individual candles. Now, letโs zoom out. Chart Patterns are formed by groups of candles over time, revealing the overall "geometry" of the market.
โ1. The Head and Shoulders (Trend Reversal) ๐ค
โThis is one of the most famous patterns. It signals that an uptrend is officially over.
โThe Look: A high peak (Head) between two slightly lower peaks (Shoulders). All three rest on a support line called the Neckline.
โThe Trade: When the price breaks below the Neckline, itโs a strong signal that a downtrend is starting.
โ2. Double Bottom & Double Top (The 'W' and 'M') ๐
โThese patterns show that the market has tested a price level twice and failed to break it.
โDouble Bottom (W): Price hits a low, bounces, hits the same low again, and then pumps. (Bullish)
โDouble Top (M): Price hits a high, drops, hits the same high again, and then dumps. (Bearish)
โ3. Bull & Bear Flags (The Trend Continuations) ๐ฉ
โNot every pattern means a reversal. Flags tell you that the market is just taking a "breather" before continuing the same way.
โBull Flag: A sharp move up (the pole) followed by a small downward-sloping channel (the flag).
โThe Signal: When the price breaks the upper part of the flag, the upward trend usually resumes with force.
โ๐ก Pro Tip: The Volume Secret
โFor a chart pattern to be "valid," watch the Volume. A breakout from a pattern (like a Bull Flag) should ideally happen on high volume. If the volume is low, it might be a "fakeout"!
โWhich pattern do you see most often on the 4-hour chart? Head and Shoulders or Bull Flags? Let us know! ๐ $BTC $BNB
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