They also say that the death cross does not guarantee future declines, as other market forces can drive the security — or currency — higher. Bitcoin, a volatile asset, has had a rough week, sliding on growing concerns about regulation, including in the U. Investing in cryptocurrencies and Initial Coin Offerings "ICOs" is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs.

Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns no stake in bitcoin or cryptocurrency-related securities. Open your position as soon as you see the pattern confirmation.

This happened when the last candle started escalating quickly and broke the pattern to the upside. For the second half of the trade, we can use the same distance as the one of the pennant pole. As it was 3 bars in height, this trade was closed 3 bars above the entry level, around - right at the top of the whole bullish move!

Two large bearish candles are followed by three bullish ones. The pattern immediately repeats itself as two bearish candles form before three bullish ones. Once a bearish candle starts forming yet again, we can immediately execute a trade after its close. We can go short as soon as we see that the following candle is bearish.

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Swing waves forms, and after a resistance breakout bullish trend continues. It is straightforward to identify these two patterns, and the probability of winning these two patterns is also very high. Tip: GBPJPY is a pair that usually make ascending and descending triangle pattern on the price chart on different timeframes. Learn in detail Symmetrical triangle chart pattern The symmetrical triangle pattern acts as a reversal and continuation chart pattern because of its equal probability of a bullish or bearish trend.

This pattern shows that market makers are making decisions. So, the price moves sideways and inwards. Inward consolidation means each progressive wave will be smaller than the previous wave. So how can we identify the trend direction using a symmetrical triangle pattern?

Using the breakout method. When this pattern forms, we draw the trendlines meeting the lower highs and higher lows. The breakout of trendlines shows that buyers will take control or sellers will overcome the market. If the upper trendline breaks, buyers will take control of the market. A break of the lower trendline means sellers will take control of the market.

Learn in detail Flag chart pattern A flag pattern is a trend continuation chart pattern consisting of an impulsive wave and a retracement wave. The flag chart pattern is the most widely used and advanced. Because the psychology of this chart pattern is very deep, it can be used in many ways to predict the forex market direction.

Based on wave structure, flag pattern is classified into two types Bearish flag pattern An impulsive bullish wave and a bearish retracement wave combine to make a flag pattern in the bullish flag. The impulsive wave resembles the shape of a pole, and retracement resembles the shape of the flag on the pole.

The breakout of the flag indicates the continuation of the bullish trend. A bearish impulsive wave and a bullish retracement wave combine to make a flag pattern in the bearish flag. This pattern usually forms in assets, currencies, or commodities.

This pattern also shows indecision in the market, and it is also a symbol of a big trend reversal. Based on the structure and location, the megaphone chart pattern is classified into three types Ascending broadening pattern Descending broadening pattern In the ascending broadening pattern, the price makes lower lows and lower highs, while in descending broadening pattern, the price forms higher highs and higher lows.

Learn in detail Bump and Run chart pattern The Bump and the Run pattern is a chart pattern that consists of two phases of the market the Bump and the Run. After the Bump phase, the run phase starts, and, in this phase, the price moves in the opposite direction to the bump phase. This is also a strategy used by market makers to deceive retail traders. Learn in detail Horizontal trend channels Trend channels refer to price channels indicating the sideways price movement between a resistance zone and a support zone.

This price pattern shows the equal forces of buyers and sellers in the market. Due to this, the price moves sideways. The breakout of trend channels predicts the direction of the price trend. However, atually making money by applying a system leads to 'strategy building', which focuses on, or consists of 'money management' and 'risk management'.

That is a whole other topic though, which I am looking forward to explaining in further educational posts, but not in this one. A system is supposed to allow you to evaluate ONE specific entry, according to specific conditions that have to be met. In order to allow you to pick up on what I'm trying to say I have prepared a very simple example of a system also referred to as 'technique'.

Since many people wanted to be part of the crypto-spikes that we have recently seen, and bought coins at all time highs, I decided to demonstrate several harmonic techniques on the BTC chart. First of all: Where are we? Where is the example taking place? The strategy your system will be part of will be more complex.

But the system itself may surprisingly be very simplistic. For instance: I have been trading with the use of 'harmonics' for a very long time. I focused on TWO different types of harmonic patterns. However, some still do it, and this would've been a perfect entry for a short order. As I have mentioned several times already, a system shall provide an entry. So, only if the requirements are met, you are allowed to make a trade. Since some of you may be unaware of what a three drives pattern is, and how to trade it, i will break it down for you: A three drives pattern is a series of lower lows or higher highs which occur in a very specific relation to each other and usually indicate the market may turn around after completing the pattern.

In detail: It consists of three drives , as the name gives away, which may be a series of three consecutive higher highs, or lower lows: bearish: bullish: each drive is interconnected with a corrective move, the corrective moves will play a very decisive role in determining the entry. In order for the trade to be executed the price excess must either be 1.

If you're uncomfortable with the three drives drawing tool you could simply measure it by yourself using a fibonacci retracement featuring the 1. You must apply the Fib rectracement on the second correction wave too. The end of the 3rd drive, which should bounce off the 1.

All that you have to do is to find a system that has proven to work out to a certain degree in the past always do never ending backtesting , implement it in your strategy risk-, and money management and strictly take the entries that your system provides for you.

A system is supposed to give you the confidence you need to blindly execute it according to its rules and requirements. The only way to gain said confidence is to a significant amount of backtesting over and over again, and literally studying the system. A trade that you are afraid of to take, for whatever reason, can still be interpreted as a strong signal to close your current positions, as in the case of this BTC example.

Not many people would dare to simply short BTC on the ATH, but relatively many people would probably start takeing profits or selling their coins if they spotted a short entry - according to whatever system s they may use. There is not THE perfect system out there.

Find a system you can apply confidently and implement it in your strategy. Now, the remaining question is where to take profits once you're in. The Three Drives pattern offers several take profit levels. There may be other ways to successfully take profits, but this is the way that has proven to be the most profitable one for me: I usually simply attach a FIB retracement to the end of the first correction move and to the end of the 3rd drive, and I take partial profits at each of these marked levels.

Back to the REAL example: the entry: the take profits: While there are many ways to apply or trade the Three Drives pattern, and some focuse on the retracements in specific, while I focuse on the extensions of the correction moves only. I don't pay much attention to the retracement level of the correction moves because there simply isn't a reliable retracement level. Some fall back to 0.

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Therefore, trade with caution.

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