Pattern Site

The Pattern Site

Pattern Trading Primer

Pattern trading, or formation trading, mainly refers to making trade decisions based on standard chart styles.

Which crypto market is best for your pattern strategy?

Most commonly, there is an edge to pattern trading in a slow market. It can be the stock markets or BTCUSD, and many crypto traders there use formation buying and selling.

The urban legend

Pattern trading is closely associated with retailers who trade patterns from ignorance and often lose.

In most cases, it is true that patterns such as "head and shoulders" are too vague to be used reliably.

Why are traders losing in cryptocurrencies for pattern trading?

The market repeats its form on a regular basis. There are market stages and seasonality. This is a fact.

It stands to reason that such conditions produce patterns.

In crypto, this could be halving of Bitcoin as an example. Halving is completely regular, repeats every four years. A supply shock occurs every time. As long as Bitcoin is relevant to everyone, halving certainly works as a seasonality.

However, the error is not in the pattern, but in the false usage of the pattern.

The greatest danger when using technical analysis is that recognizing past developments may not help predict such developments in the future.

A better approach is to treat the pattern as a trend that outlines the state of the market.

Is the market trending around the median or is it moving steadily?Is it a trend market?Is there a bullish flag? Is the market on a downtrend?
... and so on.

There are certain patterns and techniques that have been developed to help you read a particular situation.

Think of a technical pattern as a filter. It tones up the information and tones down the noise.

The best pattern for the crypto market

Three pushes on the Bollinger BandsRSI and its transformationVolume profile / VPVR