A few technical analysis patterns consistently appear in crypto, especially bitcoin, and are easy to prepare for. Known as classical charting patterns, many of these formations are a combination of a certain set of highs/lows that form into triangles, wedges, trends, flags etc.
Today's lesson is on rising wedges:
What's a rising wedge?
A rising wedge forms after an upward movement in price, and is a reversal pattern. It forms from contracting price action towards the end of the wedge as seen above. 2-3 touches of the top resistance line is needed for confirmation. Declining volume is also a great sign of a falling wedge playing out. Common equation: Falling volume + increase in price = weak move. Upon break of support below the trend line, breakout volume should increase and confirm the pattern playing out.
Usually there is a throwback to the bottom trend line after break of support, as that trend line becomes resistance. Once price re-tests this area, it can move down further.
Here's Bitcoin, currently, on a 12h chart. A rising wedge has definitely formed. The way to play this is simple. As a breakout trader, I'd place a short sell, limit order upon break down of the support level with my stop loss at about $9k.
I'll update what comes next and how this pattern plays out.
Yours truly,
BullsVsBears
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