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The cryptocurrency market moves based on supply and demand, and these forces create visible price structures on charts. These structures are called chart patterns. Understanding each technical term allows traders to interpret price behavior logically and make disciplined decisions.
Double Top Pattern (Bearish Reversal Setup)
A Double Top is a bearish reversal pattern that forms after an Uptrend. An Uptrend is a market condition where price consistently forms higher highs and higher lows, indicating strong buying pressure.
The pattern begins when price reaches a Resistance level. Resistance is a price zone where selling pressure is strong enough to stop further upward movement. The first rejection at resistance forms the First Top. After this rejection, price moves downward in a temporary decline called a Pullback.
The decline usually stops at a Support level. Support is a price area where buying pressure prevents further decline. The horizontal support formed between the two peaks is called the Neckline.
Price then moves upward again and tests the same resistance, forming the Second Top. When price fails to break resistance again, it signals weakening buyer strength.
When price closes below the neckline, it creates a Breakdown. A breakdown confirms the bearish reversal. Sometimes price returns to test the broken neckline; this is called a Retest.
A Stoploss is placed above the second top to control risk. The Target is calculated by measuring the height between the tops and the neckline and projecting that distance downward.
Bullish Flag Pattern (Continuation Setup)
A Bullish Flag is a continuation pattern that forms during a strong upward move. The strong initial upward movement is called the Flagpole. The flagpole represents aggressive buying and strong Momentum, which is the speed and strength of price movement.
After the flagpole, price enters Consolidation. Consolidation is a temporary pause where price moves sideways or slightly downward. This small channel is called the Flag.
The upper boundary of the flag is called Flag Resistance, and the lower boundary is called Flag Support. When price breaks above flag resistance, it forms a Breakout. A breakout signals that buyers are regaining control.
Sometimes price returns to the breakout level; this is known as a Retest. Traders often place a Stoploss below flag support. The Target is calculated by measuring the length of the flagpole and projecting it upward from the breakout point.
A Hammer Candle is a candlestick with a small body and long lower wick, indicating strong buying pressure. A Bullish Engulfing pattern occurs when a large green candle completely covers the previous red candle, signaling strong buyer dominance.

Rounding Top Pattern (Gradual Bearish Reversal)
A Rounding Top is a gradual bearish reversal pattern. It starts with an Uptrend and then slows near a Resistance Zone. A resistance zone is a broader area where selling pressure increases.
Instead of forming sharp peaks, price gradually curves and creates a Rounded Shape. This shape reflects Distribution, which occurs when large traders slowly sell positions at higher prices.
The base of the pattern forms a Support Zone. When price closes below this support zone, it creates a Breakdown. This breakdown confirms the bearish shift.
If price returns to test the broken support from below, it is called a Retest. After confirmation, traders may enter sell positions. A Stoploss is usually placed above the resistance zone. The Measured Move target is calculated by projecting the height of the formation downward.

Falling Channel Pattern (Bullish Breakout Setup)
A Falling Channel forms when price makes a series of Lower Highs and Lower Lows within two downward sloping parallel lines. A lower high means each new peak is lower than the previous one. A lower low means each new bottom is lower than the previous one.
The lower boundary is called the Support Trendline, and the upper boundary is called the Resistance Trendline.
When price breaks above the resistance trendline, it creates a Breakout. This breakout signals a potential Trend Reversal, which is a change from bearish to bullish direction.
If price returns to test the broken resistance as support, it forms a Retest. A Stoploss is placed below the recent low. The Target is calculated by measuring the channel height and projecting it upward.

Rising Channel Pattern (Bearish Breakdown Setup)
A Rising Channel forms when price creates Higher Highs and Higher Lows within upward sloping parallel lines. A higher high means each new peak is higher than the previous peak. A higher low means each new dip is higher than the previous dip.
The lower boundary acts as Support, and the upper boundary acts as Resistance.
If price breaks below the support trendline, it forms a Breakdown. This breakdown suggests weakening buyer strength and possible downward movement.
A Bearish Engulfing pattern, where a large red candle fully covers the previous green candle, often strengthens the breakdown signal.
After breakdown, price may return to test the broken support, forming a Retest. A Stoploss is placed above the breakdown candle. The Target is measured by projecting the channel height downward.

Breakout and Retest Concepts
A Breakout occurs when price moves above resistance or below support with strong confirmation. A breakout often signals the beginning of a new directional move.
A Fake Breakout happens when price briefly breaks a level but quickly returns inside the structure.
A Retest is when price revisits the broken level to confirm its validity before continuing.
Risk Management Terms
A Stoploss is a predefined level that limits potential loss.
The Risk-Reward Ratio compares potential profit to potential loss.
The 50% Level represents the midpoint of a projected move, often used for partial profit-taking.
The 100% Target is the full projected move based on pattern measurement.
Market Psychology Terms
Accumulation occurs when large traders buy gradually at lower prices.
Distribution occurs when large traders sell gradually at higher prices.
Momentum describes the strength and speed of price movement.
A Trend Reversal is a shift from bullish to bearish direction or vice versa.
A Continuation Pattern indicates that the existing trend is likely to resume after consolidation.
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