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Top 10 Easy Crypto Trading Patterns Every Cryptocurrency Trader Should Know (2023)

Crypto trading patterns refer to the recurring and predictable movements of cryptocurrencies in the market. These patterns can be identified through technical analysis, which involves using charts and other tools to study historical price and volume data. By recognizing and understanding these patterns, traders can potentially make informed decisions about buying and selling cryptocurrencies. In this blog post we will explore top 10 crypto trading patterns.

Welcome to the world of cryptocurrency trading! The crypto market is a highly volatile and fast-paced arena. To succeed in this market, traders must be well-versed in the various trading patterns that can appear on charts. Here are the top 10 easy crypto trading patterns that every cryptocurrency trader should know.

Trading patterns have been used in traditional markets for decades, and the same principles apply in the crypto market. Many traders believe crypto charts are even more predictable than their counterparts.

But where did trading patterns come from? The concept of charting patterns can be traced back to the early 1900s when Charles Dow, the founder of Dow Jones & Company, developed the Dow Theory. This theory proposed that stock market prices move in trends, which can be identified and used to make investment decisions.

Fast forward to today, and you’ll find that trading patterns are essential for technical analysis in the crypto market. They allow traders to identify key support and resistance levels and potential entry and exit points for trades.

This blog post will discuss the top 10 easy crypto trading patterns that every trader should know. We’ll also talk about who uses trading patterns and who they may be suitable for. So, whether you’re a new trader looking to gain an edge, or a seasoned pro looking to add to your arsenal, this blog post is for you.

History of Crypto Trading Patterns

Trading patterns have been used by traders for decades, long before the advent of cryptocurrency. However, with its highly volatile and decentralized nature, the cryptocurrency market has presented unique challenges and opportunities for traders to use patterns to inform their trades.

In the early days of cryptocurrency, trading patterns were relatively simple. Traders primarily used candlestick charts and fundamental technical analysis to identify patterns and decide when to buy and sell. However, as the market has grown and matured, so have the trading patterns and tools available to traders.

Nowadays, traders have access to a wide range of advanced charting tools and technical indicators that traders can use to identify more complex patterns and trends. Additionally, machine learning and artificial intelligence in analyzing market data have become increasingly popular among traders looking to gain an edge.

In summary, the history of trading patterns in the cryptocurrency market has seen a steady evolution over time. From the early days of simple candlestick charts to the advanced charting tools and AI-driven analysis available today, traders have more powerful tools than ever to identify patterns and make informed trading decisions.

Who Uses Crypto Trading Patterns

The great thing about trading patterns is that they can be used by a wide range of traders, from beginners to experienced professionals.

First, let’s start with the beginner traders. For those new to cryptocurrency trading, trading patterns can be a great way to understand market trends and make informed decisions about when to buy and sell different cryptocurrencies. These patterns are easy to identify and can be used as a starting point for developing a trading strategy.

On the other hand, experienced traders also find trading patterns valuable in their arsenal. They use them to confirm their analysis and predictions about market trends. They also use trading patterns to identify potential profit opportunities and make more informed decisions about when to enter or exit a trade.

However, it’s important to note that trading patterns are not a one-size-fits-all solution. While they can be helpful tools, traders should use them sparingly. Traders should also consider other factors, such as market news, fundamental analysis, and technical analysis, before making trading decisions.

In summary, trading patterns can be an excellent tool for both beginner and experienced traders in the cryptocurrency market. They provide a simple way to understand market trends and make informed decisions about when to buy and sell different cryptocurrencies. However, they should be relied on only partially, and traders should also consider other factors before making any trading decisions.

Master the Market: The Top 10 Crypto Trading Patterns to Know

Using chart patterns with technical analysis indicators can give traders a more comprehensive view of the market conditions by providing insight into price and volume behavior. Chart patterns can indicate potential trend reversals and support and resistance levels. At the same time, technical indicators can provide additional information, such as momentum and overbought/oversold conditions. This combination can increase the chances of making profitable trades by providing a more informed view of the market and confirming or contradicting potential trade signals.

Let’s get started with the top 10 crypto trading patterns! It’s important to note that the patterns are not signals. Traders should use other technical analysis indicators for confirmation. Later in this blog post, we will explore the top 5 most popular crypto technical analysis indicators to pair with trading patterns.

Head and Shoulders Trading Pattern

The Head and Shoulders pattern is a classic chart formation considered one of the technical analysis’s most reliable reversal patterns. The pattern is formed by a peak (the “head”), followed by a higher peak (the “left shoulder”), and then a lower peak (the “right shoulder”). The pattern is completed by a “neckline” that connects the lows of the left and right shoulders.

Head and Shoulders Pattern | Crypto Trading Patterns
Image by Sabrina Jiang © Investopedia 2020 Source: Investopedia

When the Head and Shoulders pattern is formed, it signals that the trend is reversing and that the price will likely move in the opposite direction. The head and shoulders pattern is considered a bearish reversal pattern, meaning that it is typically formed at the top of an uptrend and signals that the trend is about to reverse and head downwards.

The Head and Shoulders pattern is considered one of the most reliable reversal patterns because it is based on the principles of supply and demand. The pattern forms when the bulls (buyers) push the price to a new high (the head), but then the bears (sellers) take control and push the price down to form the left shoulder. The bulls then try to retake control and push the price up to create the right shoulder, but the bears retake control and push the price down.

Traders typically use the head and shoulders pattern as a sign to sell or short the asset, as the pattern is considered a bearish reversal signal.

It’s also important to note that there is an inverse head and shoulders pattern, a bullish reversal pattern that signals that the price will likely move upwards. This pattern is formed by a trough (the “head”), followed by a lower trough (the “left shoulder”), and then a higher trough (the “right shoulder”). The pattern is completed by a “neckline” that connects the highs of the left and right shoulders.

Double Top and Bottom Trading Pattern

The Double Top and Bottom pattern is another classic chart formation that is commonly used in technical analysis. As the name suggests, the pattern is formed by two peaks (tops) or two troughs (bottoms) roughly at the same level. The pattern is completed by a “neckline” that connects the lows of the two bottoms in case of double bottom or the highs of the two tops in case of a double top.

Double Top Pattern | Crypto Trading Patterns
Image by Sabrina Jiang © Investopedia 2020 Source: Investopedia

The Double Top pattern is considered a bearish reversal pattern. It is typically formed at the top of an uptrend, signaling that the trend will reverse and head downwards. Conversely, the Double Bottom pattern is considered a bullish reversal pattern. It is typically formed at the bottom of a downtrend and signals that the trend will reverse and head upwards.

The Double Top and Bottom pattern are considered one of the most reliable reversal patterns because it is based on the principles of supply and demand. The pattern forms when the bulls (buyers) push the price to a new high (double top) or low (double bottom), but then the bears (sellers) take control and push the price down (double top) or up (double bottom).

Traders typically use the double top and bottom pattern as a sign to sell (double top) or buy (double bottom) the asset, as the pattern is considered a bearish reversal signal for the double top and a bullish reversal signal for the double bottom.

It’s also important to note that the pattern’s reliability increases when the neckline is tested multiple times before the pattern is confirmed. Also, when the price breaks the neckline, it’s considered a strong signal for the reversal of the trend.

Triple Top and Bottom Trading Pattern

The Triple Top and Bottom pattern is a chart formation similar to the Double Top and Bottom pattern but with three peaks (tops) or three troughs (bottoms) roughly at the same level. The pattern is completed by a “neckline” that connects the lows of the three bottoms in case of triple bottom or the highs of the three tops in case of a triple top.

Triple Top Pattern | Crypto Trading Patterns
Triple Top. Image by Sabrina Jiang © Investopedia 2021 Source: Investopedia

Like the Double Top and Bottom pattern, the Triple Top pattern is considered a bearish reversal pattern, signaling that the trend is about to reverse and head downwards. Conversely, the Triple Bottom pattern is considered a bullish reversal pattern, signaling that the trend will reverse and run upwards.

The Triple Top and Bottom pattern is an extension of the Double Top and Bottom pattern, which means it is also based on supply and demand principles. The pattern forms when the bulls (buyers) push the price to a new high (triple top) or low (triple bottom), but then the bears (sellers) take control and push the price down (triple top) or up (triple bottom) three times.

Traders typically use the triple top and bottom pattern as a sign to sell (triple top) or buy (triple bottom) the asset, as the pattern is considered a bearish reversal signal for the triple top and a bullish reversal signal for the triple bottom.

It’s also important to note that, like the double top and bottom pattern, the reliability of the pattern increases when the neckline is tested multiple times before the pattern is confirmed. Also, when the price breaks the neckline, it’s considered a strong signal for reversing the trend.

Rising and Falling Wedge Trading Pattern

The Rising Wedge and Falling Wedge pattern are chart formations that are characterized by a series of higher highs and higher lows (Rising Wedge) or lower lows and lower highs (Falling Wedge) that converge towards a common point. The pattern is completed by two trendlines, one connecting the highs and one connecting the lows, that form a wedge shape.

Rising and Falling Wedge | Crypto Trading Patterns
Figure 2. Image by Sabrina Jiang © Investopedia 2021 Source: Investopedia

The Rising Wedge pattern is considered a bearish reversal pattern, signaling that the trend will reverse and head downwards. Conversely, the Falling Wedge pattern is considered a bullish reversal, signaling that the trend will reverse and run upwards.

The Rising Wedge and Falling Wedge patterns are based on the principles of supply and demand. The pattern forms when the bulls (buyers) push the price to new highs (Rising Wedge) or lows (Falling Wedge), but then the bears (sellers) take control and push the price down (Rising Wedge) or up (Falling Wedge). The trendlines converge towards a common point.

Traders typically use the Rising Wedge and Falling Wedge patterns as a sign to sell (Rising Wedge) or buy (Falling Wedge) the asset, as the pattern is considered a bearish reversal signal for the Rising Wedge and a bullish reversal signal for the Falling Wedge.

It’s also important to note that the reliability of the pattern increases when the price breaks the trendline; this is considered a strong signal for the reversal of the trend. Also, the trendlines’ angle can indicate the potential strength of the reversal, with a steeper angle usually indicating a stronger reversal.

Flag and Pennant Trading Pattern

The Flag and Pennant pattern is a chart formation characterized by a period of consolidation after a sharp price move, called a flag or a pennant. The flag is a rectangle-shaped pattern that forms after a sharp price move. At the same time, the pennant is a symmetrical triangle-shaped pattern that includes a strong price move. Two parallel trendlines complete the pattern, one connecting the highs and one connecting the lows, which form a flag shape, or two trendlines that converge to a point forming a pennant shape.

Flag and Pennant Pattern | Crypto Trading Patterns
Image by Julie Bang © Investopedia 2019 Source: Investopedia

Both the Flag and Pennant patterns are considered continuation patterns, meaning that they signal that the current trend will continue in the direction of the sharp price move that preceded the formation of the pattern.

The Flag and Pennant patterns are based on the principle of market psychology. The pattern forms after a sharp price move when traders are indecisive about the next direction of the price and the market consolidates. The pattern’s shape forms due to the bulls and bears pushing the price in opposite directions, creating a period of consolidation.

Traders typically use the Flag and Pennant patterns as a sign to continue to hold or to enter a trade in the direction of the preceding sharp price move, as the pattern is considered a continuation signal.

It’s also important to note that the reliability of the pattern increases when the price breaks the trendline; this is considered a strong signal for the continuation of the trend. Also, the flag or pennant’s size can indicate the continuation’s potential strength, with a bigger flag or pennant usually indicating a stronger continuation.

Doji Bullish and Bearish Trading Pattern

A Doji is a type of candle pattern that is commonly found in the charts of financial markets. It is formed when an asset’s open and close prices are virtually the same, and it suggests indecision or a possible reversal in the market. Dojis can take on different forms, but a cross or plus sign is the most common.

Bullish and Bearish Doji | Crypto Trading Patterns
Image by Julie Bang © Investopedia 2019 Source: Investopedia

There are different types of Dojis, including the long-legged Doji, which has long upper and lower shadows, and the dragonfly Doji, which has a long lower shadow and no upper shadow. Each type of Doji can indicate a different market sentiment and can be used with other technical analysis tools to make trading decisions.

It’s important to note that a Doji alone does not necessarily mean a market reversal is imminent. Instead, traders often look for confirmation of a trend reversal by observing other technical indicators or chart patterns in conjunction with the Doji.

In short, the Doji is a simple yet powerful pattern indicating indecision in the market. Traders can use it with other technical analysis tools to make trading decisions, which is a typical pattern found in financial charts.

Engulfing Bullish and Bearish Trading Pattern

The Bullish and Bearish Engulfing pattern is a chart formation that is characterized by a large candlestick that completely “engulfs” or “covers” the preceding candlestick. The Bullish Engulfing pattern forms when a small bearish candlestick is followed by a large bullish candlestick that completely engulfs the preceding bearish candlestick. Conversely, the Bearish Engulfing pattern forms when a small bullish candlestick is followed by a large bearish candlestick that completely engulfs the preceding bullish candlestick.

Engulfing Bullish and Bearish | Crypto Trading Patterns
Image by Julie Bang © Investopedia 2019 Source: Investopedia 

The Bullish Engulfing pattern is considered a bullish reversal pattern, signaling that the trend will reverse and head upwards. Conversely, the Bearish Engulfing pattern is considered a bearish reversal pattern, signaling that the trend is about to reverse and head downwards.

The Bullish and Bearish Engulfing patterns are based on the principle of market psychology. The large candlestick that engulfs the preceding candlestick is a sign that the bulls (Bullish Engulfing) or bears (Bearish Engulfing) have taken control of the market. The pattern forms when the bulls and bears are in a tug of war, and one side wins and takes control of the market.

Traders typically use the Bullish and Bearish Engulfing patterns as a sign to buy (Bullish Engulfing) or sell (Bearish Engulfing) the asset, as the pattern is considered a bullish reversal signal for the Bullish Engulfing and a bearish reversal signal for the Bearish Engulfing.

It’s also important to note that the reliability of the pattern increases when the pattern forms after a prolonged trend. When the engulfing candlestick has a higher volume, this is considered a stronger signal for reversing the trend.

Harami Bullish and Bearish Trading Pattern

The Harami pattern is another typical candle pattern that is often found in financial charts. The pattern is formed when a larger real body of the opposite color engulfs a small real body (candlestick). The name “Harami” is derived from the Japanese word “pregnant,” and the pattern is similar to the shape of a pregnant woman.

Harami Bullish | Crypto Trading Patterns
Image by Sabrina Jiang © Investopedia 2020 Source: Investopedia

The Harami pattern can be bullish or bearish depending on the color of the larger real body, the direction of the trend, and the position of the smaller real body within the larger one. A bullish Harami occurs when a larger bullish real body engulfs a small bearish real body, suggesting a potential bullish reversal. A bearish Harami occurs when a larger bearish real body engulfs a small bullish real body, suggesting a possible bearish reversal.

It’s important to note that the Harami pattern is a weak signal and requires confirmation. The Harami pattern is more reliable when it occurs after a prolonged trend and is less reliable when it occurs during a period of consolidation. Traders often look for other technical indicators or chart patterns to confirm a trend reversal.

In short, the Harami pattern is a candle pattern that suggests a potential reversal in the market. It can be bullish or bearish depending on the color of the larger real body and its position within the larger one. It’s a weak signal and requires confirmation. Still, when used with other technical analysis tools, it can help make trading decisions.

Harami Cross Bullish and Bearish Trading Pattern

The Harami pattern is another typical candle pattern that is often found in financial charts. Just like the pattern Harami earlier, this also uses the name “Harami,” which is derived from the Japanese word “pregnant,” The pattern is similar to the shape of a pregnant woman. The pattern is formed when a larger real body of the opposite color engulfs a small real body (candlestick).

Harami Cross Bullish and Bearish | Crypto Trading Patterns
Image by Julie Bang © Investopedia 2020 Source: Investopedia

The Harami pattern can be bullish or bearish depending on the color of the larger real body, the direction of the trend, and the position of the smaller real body within the larger one. A bullish Harami occurs when a larger bullish real body engulfs a small bearish real body, suggesting a potential bullish reversal. A bearish Harami occurs when a larger bearish real body engulfs a small bullish real body, suggesting a possible bearish reversal.

It’s important to note that the Harami pattern is a weak signal and requires confirmation. The Harami pattern is more reliable when it occurs after a prolonged trend and is less reliable when it occurs during a period of consolidation. Traders often look for other technical indicators or chart patterns to confirm a trend reversal.

In short, the Harami pattern is a candle pattern that suggests a potential reversal in the market. It can be bullish or bearish depending on the color of the larger real body and its position within the larger one. It’s a weak signal and requires confirmation. Still, when used with other technical analysis tools, it can help make trading decisions.

Abandoned Baby Bullish and Bearish Trading Pattern

The Abandoned Baby pattern is a bullish reversal candle pattern formed in financial market charts. The name “Abandoned Baby” comes from the shape of the pattern, which looks like an abandoned baby. Three candle lines characterize the pattern: the first and the third candle lines are Dojis, and the middle is a long candle line opposite in color to the first and third.

Abandoned Baby Pattern | Crypto Trading Patterns
Image by Sabrina Jiang © Investopedia 2021 Source: Investopedia

The Abandoned Baby pattern occurs after a downtrend, suggesting that the bears have given up control of the market and the bulls are likely to take over. The first Doji represents a possible bearish reversal, and the long candle line represents the bearish sentiment continuing. But the third Doji represents that the bears have abandoned their position and the bulls have taken over. Hence the name Abandoned Baby.

It’s important to note that the Abandoned Baby pattern is relatively rare and requires confirmation. The pattern is more reliable when it occurs after a prolonged trend and is less reliable when it occurs during a period of consolidation. Traders often look for other technical indicators or chart patterns to confirm a trend reversal.

In short, the Abandoned Baby pattern is a bullish reversal candle pattern that is formed by three candle lines, where the first and the third lines are Dojis. The middle one is a long line that is opposite in color. It suggests that bears have given up control, and bulls will likely take over. It’s a relatively rare pattern and requires confirmation. Still, when used with other technical analysis tools, it can help make trading decisions.

Using technical indicators in conjunction with chart patterns can provide traders with a more comprehensive view of the market conditions by providing additional information, identifying potential entry and exit points, confirming the strength of a trend, and identifying possible divergences. This can increase the chances of making profitable trades by providing a more informed view of the market.

However, they are not signals to buy or sell by themselves. Traders should use them alongside other indicators and analyses to confirm trends and make informed decisions.

Moving Averages (MA’s)

Moving averages are a popular technical analysis indicator used to smooth out price action and identify trends in the market. They are calculated by taking the average of a certain number of past prices, typically closing prices, over a specific period.

50 day sma | crypto trading patterns
Simple Moving Average (50d) | Image by Sabrina Jiang © Investopedia 2021 Source: Investopedia

There are two main types of moving averages: simple moving averages (SMA) and exponential moving averages (EMA). Simple moving averages take the arithmetic mean of a set of prices over a certain period, while exponential moving averages give more weight to recent prices.

For example, a 50-day moving average would take the average closing price of the last 50 days and plot it on the chart. Suppose the current price is above the moving average. In that case, it indicates an uptrend. If the current price is below the moving average, it means a downtrend.

Traders can also use moving averages to identify potential support and resistance levels. For instance, if the price consistently bounces off a specific moving average, it could indicate that this average acts as a support or resistance level. Traders can also use them to identify crossovers, indicating potential trend reversals.

It’s important to note that moving averages are a lagging indicator. They are based on past prices and are less responsive to short-term fluctuations. However, traders can use them with other indicators to confirm trend direction and identify potential entry and exit points.

In summary, moving averages are a widely used technical analysis indicator that can help traders identify trends and potential support and resistance levels in the market. They are calculated by taking the average of past prices over a specific period of time and can be used to confirm trend direction and identify potential entry and exit points.

Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a popular technical analysis indicator used to measure a price move’s strength. It compares the magnitude of recent gains to recent losses in an attempt to determine the overbought and oversold conditions of an asset.

Relative Strength Index | crypto trading patterns
Relative Strength Index | Image by Sabrina Jiang © Investopedia 2021 Source: Investopedia

The RSI is a momentum oscillator that ranges between 0 and 100. It is calculated by taking the average gain of an asset over a certain period and dividing it by the average loss of the same period. A reading above 70 is considered overbought, indicating that the asset may be due for a price correction. In contrast, a reading below 30 is considered oversold, meaning the asset may be undervalued and due for a price increase.

Traders can use RSI to identify potential buying and selling opportunities. When the RSI is above 70, it can indicate that the asset is overbought and may be due for a price correction or a sell signal. Conversely, when the RSI is below 30, it can indicate that the asset is oversold and may be due for a price increase or a buy signal.

It’s important to note that RSI is a momentum oscillator, which means that it may stay in overbought or oversold territory for an extended period; it’s not a signal to buy or sell by itself; traders should use it alongside other indicators and analysis to confirm trends and make informed decisions.

The Relative Strength Index (RSI) is a popular technical analysis indicator used to measure a price move’s strength by comparing the magnitude of recent gains to recent losses. It ranges between 0 and 100, and it’s used to identify overbought and oversold conditions of an asset, which can indicate potential buying and selling opportunities. However, it’s not a signal to buy or sell by itself – use it alongside other indicators.

Bollinger Bands® (BB)

Bollinger Bands are a popular technical analysis indicator that is used to measure volatility in the market. They consist of a simple moving average (SMA) and two standard deviation lines, one above and one below the SMA, creating a band around the price.

Bollinger bands | crypto trading patterns
Bollinger Bands® | Image by Sabrina Jiang © Investopedia 2021 Source: Investopedia

The idea behind Bollinger Bands is that prices stay within the upper and lower bands during relatively stable volatility, while breaking out of the bands can indicate a potential trend reversal. When the prices break above the upper band, it can indicate that the asset is overbought and has a sell signal. Breaking below the lower band can suggest that the asset is oversold and a buy signal.

Traders can also use Bollinger Bands to identify potential support and resistance levels. For instance, if the price is consistently bouncing off the upper or lower band, it could indicate that this band is acting as a support or resistance level. Additionally, the width of the bands can also be used as a measure of volatility. As the bands are based on standard deviation when the bands are wide, it indicates high volatility. When the bands are narrow, it indicates low volatility.

It’s important to note that Bollinger Bands are a lagging indicator and that prices can remain outside the bands for extended periods. Also, like other indicators, traders should use them with additional analyses and indicators to make informed decisions.

In summary, Bollinger Bands are a widely used technical analysis indicator that can help traders identify volatility and potential support and resistance levels in the market. They are made up of a simple moving average and two standard deviation lines, and traders can use them to identify potential trend reversals and measure volatility. They are lagging indicators and should be used with other analyses and indicators to make informed decisions.

Stochastic RSI (STOCH RSI)

The Stochastic RSI (Stoch RSI) is a technical indicator that combines two popular indicators, the Stochastic Oscillator and the Relative Strength Index (RSI). It is used to identify overbought and oversold conditions and potential trend reversals.

Stoch rsi | crypto trading patterns
Stochastic RSI | Image by Sabrina Jiang © Investopedia 2021 Source: Investopedia

The Stoch RSI is calculated by applying the Stochastic formula instead of the price values to the RSI values. It ranges between 0 and 1, with values above 0.8 considered overbought and below 0.2 considered oversold. When the Stoch RSI is overbought, it can indicate that the asset is overbought and may be due for a price correction or a sell signal. Conversely, when the Stoch RSI is oversold, it can indicate that the asset is oversold and may be due for a price increase or a buy signal.

Traders can also use the Stoch RSI to identify potential trend changes by looking for divergence between the Stoch RSI and the price. For example, if the price is making new highs, but the Stoch RSI is not, it can indicate that the trend is losing momentum and potential trend reversal.

It’s important to note that the Stoch RSI is a momentum oscillator and may stay in overbought or oversold territory for an extended period. Like other indicators, traders should use them alongside other indicators and analyses to confirm trends and make informed decisions.

In summary, The Stochastic RSI (Stoch RSI) is a technical indicator that combines the Stochastic Oscillator and the Relative Strength Index (RSI) to identify overbought and oversold conditions, as well as potential trend reversals. It ranges between 0 and 1, and it’s used to identify possible buying and selling opportunities. However, it’s not a signal to buy or sell by itself – use it alongside other indicators.

Moving Average Convergence Divergence (MACD)

The Moving Average Convergence Divergence (MACD) is a popular technical analysis indicator used to identify trend direction and momentum. It is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA.

macd | crypto trading patterns
MACD | Image by Sabrina Jiang © Investopedia 2022 Source: Investopedia

The MACD line is the difference between these two moving averages, while the signal line is a 9-day EMA of the MACD. A positive MACD indicates that the 12-day EMA is above the 26-day EMA. It can display an uptrend, while a negative MACD shows that the 12-day EMA is below the 26-day EMA and can indicate a downtrend.

Additionally, the MACD histogram represents the difference between the MACD line and the signal line. It can indicate the momentum of the trend. When the histogram is above the zero line and positive, it shows a bullish momentum. When the histogram is below the zero line and negative, it indicates a bearish momentum.

Traders can also use the MACD to identify potential trend changes by looking for crossovers between the MACD and the signal line. For example, suppose the MACD crosses above the signal line. In that case, it can indicate a potential bullish trend reversal. If the MACD crosses below the signal line, it can mean a possible bearish trend reversal.

It’s important to note that the MACD is a lagging indicator. It is based on past prices and can react slowly to short-term fluctuations. Therefore, it should be used with other indicators and analyses, such as trendlines and candlestick patterns, to confirm trends and make informed decisions. Traders should also consider other factors, such as market news and fundamental analysis, when making trading decisions.

In summary, the Moving Average Convergence Divergence (MACD) is a popular technical analysis indicator used to identify trend direction and momentum. It is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. The MACD line, signal line, and histogram are used to indicate the trend, momentum, and potential trend reversals. The MACD is a lagging indicator and should be used with other indicators and analyses to confirm trends and make informed decisions.

Conclusion

In conclusion, trading patterns can be a powerful tool for traders in the cryptocurrency market. As we’ve seen in this blog post, they can provide valuable insights into market trends and help traders make more informed decisions about when to enter or exit a trade. From the early days of simple candlestick charts to the advanced charting tools and AI-driven analysis available today, traders have more powerful tools than ever to identify patterns and make informed trading decisions.

However, it’s important to remember that trading patterns should not be relied on exclusively. Traders should also consider other factors, such as market news, fundamental analysis, and technical analysis, before making trading decisions. Additionally, it’s also essential to practice and test different strategies using demo accounts or historical market data before applying them to actual trading.

We hope this blog post has helped readers understand the importance of trading patterns in the cryptocurrency market and that the top 10 easy crypto trading patterns we’ve outlined will be a useful starting point for developing a trading strategy. For those who want to learn more about trading patterns, we’ve provided a list of recommended resources that can help deepen their understanding and improve their performance.

In summary, trading patterns can be a valuable tool for traders in the cryptocurrency market. Traders should use them alongside other factors to make informed trading decisions. With practice and study, traders can improve their performance.

  1. TradingView – A popular charting and analysis platform that offers a wide range of technical indicators and charting tools and a community of traders who share their insights and analysis.
  2. Investopedia – A comprehensive online financial education site that offers in-depth articles and tutorials on trading patterns and other trading strategies.
  3. CryptoPanic – A crypto news aggregator that will help you stay updated with all cryptocurrency news.
  4. Technical Analysis of the Financial Markets by John J. Murphy – A classic technical analysis book covering the basics of trading patterns and other technical indicators and how to use them to inform trading decisions.
  5. The Complete Guide to Technical Trading Tactics: How to Profit Using Pivot Points, Candlesticks & Other Indicators by John L. Person – This book explains how to use different technical indicators and trading patterns to identify potential buying and selling opportunities in the market.
  6. Make Passive Money in Crypto – Top 5 ways you can make passive income with crypto.
  7. BravoBot – A cryptocurrency trading bot platform for Binance (that’s us!)