This post falls into the realm of technical analysis. I was reviewing some 2 hour charts from content another viewer showed me, just so I could see what the market is up to, and see what day to day traders are thinking. I discovered triangles!!!
Triangles happen, they are not completely uncommon, but for most of bitcoin's bull run to 3k, it has formed very few triangles. I was checking, and I really did not see many.
Traders, often swing traders, use triangles as a method of gauging period of volatility. The traditional method is as follows:
- Whatever side the triangle breaks on, is the side you take, with a stop-loss in case you are wrong.
So many people use this method; however, any major triangle is manipulated. All the day traders watch them, and a large one will put in an order to make the triangle break as they want, believing that there will be a rush of orders following the break, giving them more orders to sell/buy into, or perhaps actually successfully manipulating the market higher/lower in certain fringe cases.
Whatever the case, I have learned that most triangles are followed by periods of extreme price swings.
By the end of the 25th of July, we might expect to see these triangles broken both for ETH and BTC. This really wont tell us much because it could be manipulation either way. However, what it does tell me is that in the next 7 days, we should see a dramatic price shift one way or another, deviating from these ranges we have been trading in.
So just remember!!!
- Triangles are manipulated, they will break one way, and then do a U-turn and go the exact opposite of the way they broke
- Triangles rarely ever break how you want or expect them to, some of my worst burns when I was learning some 10 years ago was triangle trades
- Triangles generally are followed by price swings, and I have found this to be their useful feature