If it appears at the end of a downtrend, it is known as a bullish reversal. If this pattern appears at the end of an uptrend, it is referred to as a bearish reversal. This pattern forms when the price reaches a high, pulls back, and then rises to a similar high or falls to a similar low. This pattern is classified as a bearish reversal pattern. It is shaped like a head with two shoulders. This is a triple peak pattern observed when the price reaches a peak, is then exceeded by a higher peak, and eventually falls back to a lower peak. Reversal patterns usually occur when a trend is ending they can signal a shift in the asset’s price. Reversal patterns can be employed to identify potential direction changes in market trends. These patterns are generally viewed as signs of further upward price trends. An ascending triangle has a flat top and an upward-sloping bottom trendline, while a descending triangle has a flat bottom and a downward-sloping top trendline. These patterns form when the price is moving in a range with a series of higher lows or lower highs. These patterns are usually viewed as signs of a continuing uptrend. Flag patterns have a rectangular shape, while on the other hand, pennants are more triangular in shape. These patterns typically are formed after a sharp price move occurs, where the price consolidates in a narrow range. It is expected that the preceding trend will remain even after the pattern is finished. Price continuation patterns indicate that there will be a period of stagnation before the price regains its previous momentum. This pattern has the potential to result in both a bullish and a bearish breakout. The top line serves as resistance, while the bottom line serves as support. This pattern emerges when the price fluctuates within two horizontal boundaries. This neutral chart pattern has no particular direction bias and can potentially result in either a bullish or a bearish breakout. This pattern is identified when the price is moving in a range, forming a triangle shape with successive lower highs and higher lows.
The pattern that develops can result in either the continuation or the reversal of the current trend.
The market exhibits a bilateral pattern when buyers and sellers are unable to gain an advantage.
Here is an overview of each of these types and some examples. There are three main types of chart patterns: reversal, continuation, and bilateral. Source: Soheil PK0 3 Major Chart Pattern Types
Past market data and current price action of an asset, such as cryptocurrency, can help detect potential trends, reversals, and trading opportunities.
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