If you don't know how to do analyze trends in the crypto market or interpret charts you may struggle to win your trades and make profits.
I'm going to simplify some parts of technical analysis so that you can sharpen your skills to make money trading crypto consistently.
As a beginner, it's important to know the 2 types of technical analysis. (1) Chart Patterns (2) Technical Indicators
Understanding both will allow you to be able to have a trading plan with good entry and exit prices.
In some of my previous posts, I emphasized the reason why you need to learn to recognize Candlesticks, so I won't revisit that in this short article.
Let's talk about 3 chart patterns you need to know as a newbie crypto trader or investor.
1) Head and Shoulders: This chart pattern has a tall middle part that peaks higher and smaller formed wings on both sides.
Whenever I see the candlesticks form this structure, I already know that the market is ready to reverse down after a Bullish uptrend.
You must know that once the price falls below the support line formed, it's breaking out into a downtrend.
2) Double Top: Whenever you see candlestick peak from two points higher, that's a double top.
It's another trend reversal that traders use to short the market, because once it retraces back to the same level after two peaks, a downtrend will likely come into play in full force.
3) Cup and handle: I don't know why I have not bumped into these chart pattern before. But it's a very important chart pattern to note because it's a pattern that forms when the price falls over a period of time but it experiences a quick comeback that forms something that look like a “U" round bottom.
But the handle is formed when the price of an asset enters a temporary retracement. It looks like two downward parallel lines but in many cases the Bullish trend is most likely to continue.
