Crypto Trading 101: Chart Analysis 加密货币交易101：交易图表分析

Reading chart and maximising profits 从阅读交易图表获得利润

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Exonium Exchange

8 min readApr 24, 2020

Technical analysis (TA) allows different ways to analyze the financial markets using. Some traders will use indicators and oscillators, while others will base their analysis only on price action.

Candlestick charts allow traders to identify historical prices over time by studying the historical price action of a cryptocurrency and recurring patterns. Candlestick patterns can derive to a conclusion about the cryptocurrency, and traders use it to take advantage of that in cryptocurrency markets.

The most common examples of these patterns are referred to as classical chart patterns, the more reliable trading indicators known in the trading community. As technical patterns aren’t bound by any scientific principle or physical law, their effectiveness highly depends on the number of market participants implementing them.

Flags/Pennants

A flag is an area of consolidation that’s against the direction of the long-term trend and occurs after a sharp movement in price. The flag or pennant chart pattern is formed right after a bullish or bearish price movement followed by a period of consolidation. This is where price tends to stabilize before continuing in the original direction of the trend. The chart will look like a flag on a flagpole, where the pole is the impulse move, and the flag is the area of consolidation.

Flags may be used to identify the potential continuation of the trend. The volume accompanying the pattern is important. Ideally, the impulse move should happen on high volume, while the consolidation phase should have lower, decreasing volume. Pennants are basically a variant of flags where the area of consolidation has converging trend lines, like a triangle. The pennant is a neutral formation; the interpretation of it heavily depends on the context of the pattern.

Bull flag

The bull flag happens in an uptrend, follows a sharp upward movement, and it’s typically followed by continuation further to the upside.

Bear flag

The bear flag happens in a downtrend, follows a sharp downward movement, and it’s typically followed by continuation further to the downside.

Triangles

A triangle is a chart pattern characterized by a converging price range that’s typically followed by the continuation of the trend. The triangle signals a pause in the underlying trend but may indicate a reversal or continuation patterns.

Ascending triangle

An ascending triangle is a bullish formation that forms a breakout pattern when the price breaches the upper horizontal trendline with increasing volume. The upper trendline must be horizontal, indicating nearly identical highs, which form a resistance level. The lower trendline is rising diagonally, indicating higher lows as buyers patiently increase bids. Eventually, buyers will rush into buying above the resistance price after losing patience, which triggers more buying as the uptrend resumes. The upper trendline, which was formerly a resistance level, now becomes support.

Descending triangle

The descending triangle is the exact opposite of the ascending triangle. It forms when there is a horizontal support area and a declining trend line drawn across a series of lower highs. In the same way as the ascending triangle, each time price bounces off the horizontal support, sellers step in at lower prices, creating lower highs. Typically, if the price breaks through the horizontal support area, it’s followed by a quick spike down with high volume, forming a bearish pattern.

Symmetrical triangle

The symmetrical triangle is illustrated by a falling upper trend line and a rising lower trend line, both happening at roughly an equal slope. As the price moves toward the peak, it will eventually breach the upper trendline for a breakout and uptrend on rising prices or breach the lower trendline forming a breakdown and downtrend with falling prices. The symmetrical triangle is considered to be a neutral pattern, neither a bullish nor a bearish pattern, as its interpretation heavily depends on the context, simply representing a period of consolidation.

Wedges

A wedge is a price pattern marked by converging trend lines on a price chart. The two trend lines are drawn to connect the respective highs and lows of a price over the course of 10 to 50 periods, indicating tightening price action. The trend lines show that the highs and lows are either rising or falling at a different rate.

It might mean that a reversal is impending, as the underlying trend is getting weaker. A wedge pattern may be accompanied by decreasing volume, also indicating that the trend might be losing momentum.

Rising wedge

This usually occurs when a cryptocurrency’s price has been rising gradually, but it can also occur in the midst of a downward trend as well. The rising wedge is a bearish reversal pattern. It suggests that as the price tightens up, the uptrend is getting weaker and may finally break through the lower trend line.

Falling wedge

When a cryptocurrency price has been on the decline, a wedge pattern can occur just as the trend makes its final downward move. The falling wedge is a bullish reversal pattern. It indicates that tension is building up as price drops and the trend lines are tightening. A falling wedge often leads to a breakout to the upside with an impulse move.

Double top and double bottom

Double tops and double bottoms are patterns that occur when the market moves in either an “M” or a “W” shape. Even if the relevant price points aren’t exactly the same but close to each other, it can still be considered as a Double top or Double bottom pattern.

Typically, the two low or high points should be accompanied by higher volume than the rest of the pattern.

Double top

Double top is a bearish reversal pattern where the price reaches a high two times and it’s unable to break higher on the second attempt. At the same time, the pullback between the two tops should be moderate. The pattern is confirmed once the price breaches the low of the pullback between the two tops.

Double bottom

The double bottom is a bullish reversal pattern where the price holds a low two times and eventually continues with a higher high. Similarly to the double top, the bounce between the two lows should be moderate. The pattern is confirmed once the price reaches a higher high than the top of the bounce between the two lows.

Head and shoulders

The head and shoulders is a bearish reversal pattern with a baseline and three peaks on the chart. The two lateral peaks should roughly be at the same price level (like Double Top), while the middle peak should be higher than the other two. The pattern is confirmed once the price breaches the baseline support.

Inverse head and shoulders

This is the opposite of the head and shoulders indicating a bullish reversal. An inverse head and shoulders are formed when the price falls to a lower low in a downtrend, then bounces and finds support at roughly the same level as the first low. The pattern is confirmed once the price breaches the neckline resistance and continues higher.

***Disclaimer: This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to risk.

**Photo Credits:
https://tradingstrategyguides.com/
https://www.dailyfx.com/
https://vostrafx.com/lesson/the-head-and-shoulders-pattern/

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Quick guide:

技术分析（TA）允许使用不同的方法来分析金融市场。一些交易者将使用指标和摆动指标，而其他交易者将仅基于价格走势进行分析。

烛台图使交易者可以通过研究加密货币的历史价格行为和重复模式来确定一段时间内的历史价格。烛形模式可以得出有关加密货币的结论，交易者可以利用它来利用加密货币市场中的这种优势。

这些模式的最常见示例称为经典图表模式，这是交易社区中已知的更可靠的交易指标。由于技术模式不受任何科学原理或物理法则的约束，因此其有效性在很大程度上取决于实施这些技术的市场参与者的数量。

旗帜/三角旗形

旗帜是一个与长期趋势相反的整合区域，在价格急剧波动后出现。在出现看涨或看跌的价格移动后紧接着一段时间的整理，就形成了旗形或三角旗图型。这是价格趋于稳定，然后继续沿趋势的原始方向前进的地方。图表看起来像旗帜标志，其中旗杆是脉冲移动，而旗标是合并区域。

标记可用于识别趋势的潜在延续。模式伴随的音量很重要。理想情况下，冲量移动应该发生在巨大的交易量上，而合并阶段应该具有较小的，逐渐减小的交易量。三角旗基本上是标志的一种变体，其中合并区域具有会聚的趋势线，例如三角形。三角旗形是中立的；结果取决于模式。

牛市旗

多头信号发生在上升趋势中，跟随急剧的上升运动，通常随后会继续向上延伸。

熊市旗

空头信号出现在下降趋势中，跟随急剧的向下运动，通常随后会继续向下移动。

三角形

三角形是一种图表模式，其特征是价格范围趋于收敛，随后通常会延续趋势。三角形表示潜在趋势已暂停，但可能指示反转或延续模式。

上升三角形

上升三角形是牛市形态，当价格随交易量增加而突破上水平趋势线时，会形成突破形态。上趋势线必须是水平的，指示几乎相同的高点，形成阻力位。较低的趋势线呈对角线上升，表明较低的较高价位是因为买家耐心地提高了出价。最终，在失去耐心之后，买家将急于在阻力位上方买入，随着上升趋势的恢复，触发了更多的买盘。先前曾是阻力位的较高趋势线现在成为支撑。