In this article, I will introduce to you in turn 9 basic coin trading models. These are very essential patterns for you to judge the trend of the market. These nine patterns are based on trend lines, which are suitable for you to apply long-term predictions. So it is more suitable for exchangers than traders margin.
However, I do not advise you to completely trust these models. The trading coin model is for reference only. In order to make an investment decision, you should analyze more factors about market psychology and general judgment to make the right choice.
Before introducing you to these 9 patterns, I will briefly talk about what technical analysis is and its importance.
See also: Technical analysis guide: Basic candlestick patterns
What is technical analysis?
It is the trader learning the price movements.
The basic principle is observing and seeing past price movements to determine possible volatility situations.
We often hear the phrase “History often repeats itself.” That is the belief and the basis on which technical analysis is based.
Technical analysis often looks for patterns that have formed in the past and assumes that these patterns will react in the same way now.
Technical analysis serves as a basis for traders to rely on. Thereby, there will be grounded decisions, not subjective feelings.
These are brief introductions to the concept technical analysis, Now let’s start to learn about 9 basic coin trading models that are often used.
Head and Shoulder (Head and Shoulder) coin trading model
This trading pattern usually appears at the end of a trend. This is a reversal pattern in a previous trend.
Eg: “Previously a downtrend appeared inverted head and shoulders pattern, then the next trend will likely be an upward reversal pattern. Or the previous trend is up and caught head and shoulders pattern, after which the price will likely fall”.
Shoulder, head and shoulders are favorable
Simulation image of the dominant head and shoulders pattern:
This model requires the the time phase needs to be the same. The time to form the left shoulder and the time to form the right shoulder are almost similar. Of course it can’t be exactly 100% equal, but it shouldn’t be too disparate. Because of the large difference, the model will no longer be accurate.
In this pattern, there will be a neckline (Neckline) Red. Before the head and shoulders pattern formed, this neckline acted as the support. This support level is quite strong, as it has crossed two bottoms. At this point we need to wait for the support to be broken, when the price breakout out of that area will reverse downwards and support becomes resistance.
To better understand support and resistance levels, you can refer to the article: Basic technical analysis guide: what are trendlines, support and resistance levels?
Inverted head and shoulders
Similar to the dominant head and shoulders pattern. This model also requires the the time phase needs to be the same. The time to form the left shoulder and the time to form the right shoulder are almost similar.
Besides, it also has a neckline (Neckline) Red. Before the head and shoulders pattern formed, this neckline acted as the resist and this resistance is also quite strong, as it passed through 2 peaks. At this point we need to wait for the resistance to be broken, when the price breaks out of that area, it will reverse to the upside. At this moment resistance becomes support.
When the price comes back to test the support area, we will place a buy order here. And the target profit (Profit) is calculated from the point of the breakout pattern up to a length equal to that from the neck to the top of the head of the pattern, can take profit (refer to the illustration).
Trade coin triangle model (Triangle)
In the triangle pattern, we will have 3 different types of patterns. Each model will have its own meaning but have a relatively similar shape.
Ascending Triangle Pattern
In the simulation above, in the first image on the top you will see cAt the right angle is above, the tops of the price are almost flat, the troughs are increasing. At this time, the buying force (buy) pushed the price up, while the selling force (sell) could not push the price down.
In this pattern, usually the price will break out and go up.
Descending Triangle Pattern
In the second simulation, it will be seen that it is the opposite of the ascending triangle, the descending triangle has right angle is below. At this moment cThe bottom of the price is almost flat, price peaks are getting lower and lower. This shows that the buying force is not as strong as the selling force.
Until the price breaks out of the pattern, the price will follow the downward trend.
In the 3rd simulation you will see price peaks are getting lower, cThe bottom of the price is increasing gradually. This shows that the sell (sell) is getting stronger and stronger, the buying force is getting stronger and stronger, the tension between the two buying and selling options is getting stronger and stronger.
When the price breaks out first, that side will prevail.
Retangle model (Retangle)
Rectangular models also have 2 types: Bullish Rectangle Pattern and discount rectangular pattern.
You see the picture, notice that 2 parallel lines represent 2 lines Support and Resist.
In this pattern, we also wait for the price to break out, when the break price will go another distance at least equal to the height of the rectangle. This is the price range that the minimum price can go, usually it will go further.
Flag pattern (Flag)
With this flag model we also have 2 types: Bullish flag pattern and bearish flag pattern.
Bullish Flag Pattern
With bullish flag pattern hey, you see the picture, you will see that before that there was a very strong uptrend (this often happens, it may be because there is some good news pushing, causing the price to fall very quickly), right after that price goes sideways. This forms a rectangular flag and there is a downtrend line (this is the period when investors take a break, take profits, or some say this is a period of energy accumulation) after the increase has ended. stroke. After the price breaks out of the flag up, the price will go up 1 segment equal to the body of the flag.
Bearish Flag Pattern
In contrast to the bullish flag pattern, this bearish flag pattern you will see in the picture is that before there was a strong downtrend, then formed a rectangular flag pattern with 2 downtrend lines. If the price breaks out of the flag down, the price will drop down a segment equal to the body of the flag.
Cup and handle model (Cup and Handle)
This is a model that is shaped like a cup and a handle, so that’s what it’s called. In practice, this pattern is very difficult to discern, depending on the relative position when we zoom in on the chart.
To determine the entry point, you can combine with Fibonacci, drag from the bottom of the cup to the top of the cup, The entry point is located at the Fibonacci area 0.618 and 0.5 at the handle. If you don’t know how to use it FibonacciI will do a tutorial later.
The target price on breakout from the handle is equal to the height of the cup.
Looking at the simulation, we will see that this wedge pattern closely resembles the triangle pattern. However, it is different from the triangle pattern that both sides are pointing up or both sides are pointing down. And it also has 2 types: Rising wedge price pattern and falling wedge price pattern.
Rising wedge price pattern
As you can see in the picture, both sides are pointing up, showing that buying force is dominant, selling force is weaker. At this time, the price is being pushed more and more but not much, there is a resistance level to hold the price. Until there is a person or a group that is stronger and overwhelms the buyers, the price will break out to the downside.
Falling wedge price pattern
In contrast to the rising wedge price pattern, you will notice in the picture that a falling wedge price pattern has two sides pointing down, the sellers are now very dominant, the buyers still hold the position. is priced at a support level. Although the sellers are dominant, however, if there is someone or a group that is stronger and overwhelming and breaks out than the sellers, then the price will go up.
Double Top – Bottom Pattern
The double top and bottom pattern acts as a reversal pattern. Before there was a very long uptrend or downtrend price and the formation of 2 tops or 2 bottoms, the probability of this pattern being successful is very high.
Double Top coin trading model
You see the image above in the 2-peak model, this model has 2 nearly equal peaks, not much difference.
The minimum target price after the break is equal to the height of the pattern.
Double bottom coin trading model
Similar to the 2-peak model, we also have:
- 2 bottoms are almost equal, not too much difference.
- The target price is similar to the 2-peak pattern, the minimum after the break is equal to the height of the pattern.
Triple Top – Bottom pattern
This pattern is similar to the two tops and two bottoms above, but it has one more top or one bottom.
The target price after the breakout is at least equal to the height of the pattern.
At this 1-2-3 model there are also 2 types, I will divide it into model 1-2-3 buy and 1-2-3 models for sale for your easy understanding:
1-2-3 buy pattern (1-2-3 buy)
You see the picture on the left, this pattern is similar to the double bottom model. You saw before that the trend was down and formed 2 bottoms, but here, the latter bottom is higher than the previous one, then we wait for the price to break out of position 2, then buy (buy) and normally price will go up.
Model 1-2-3 sell (1-2-3 sell)
You see the picture on the right, this model is almost similar to the 2-peak model. Before, you see that the trend is up and forming 2 peaks, but the latter peak is lower than the previous one, waiting for the price to break out of the area of position 2, then we proceed to sell because usually then the price will go down.
Perhaps this article will provide readers with basic knowledge that will help you trade coins in a “steadier” way. Although technical analysis tools will help you in part, you need to have an effective capital management strategy.
Hope through the article Technical analysis guide: 9 basic coin trading patterns you need to know This will help those who are just starting to trade coins have a little more knowledge and understanding of coin trading models. In the following articles, I will analyze in more depth and detail.
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