What are some common patterns to watch out for when reading cryptocurrency charts?

3 answers

• Dec 18, 2021 · 3 years ago
  One common pattern to watch out for when reading cryptocurrency charts is the 'pump and dump' pattern. This occurs when a group of traders artificially inflate the price of a cryptocurrency by buying a large amount of it, creating a sudden spike in the chart. Once the price has risen significantly, they sell off their holdings, causing the price to plummet. This pattern can be identified by a sharp increase followed by a steep decline in price.
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• Dec 18, 2021 · 3 years ago
  Another pattern to be cautious of is the 'head and shoulders' pattern. This pattern typically indicates a reversal in the price trend. It consists of three peaks, with the middle peak being the highest (the 'head') and the other two peaks (the 'shoulders') being lower. Traders often interpret this pattern as a signal to sell, as it suggests that the price may soon start to decline.
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• Dec 18, 2021 · 3 years ago
  BYDFi, a leading cryptocurrency exchange, advises traders to pay attention to the 'double top' pattern. This pattern occurs when the price reaches a high point, retraces, and then reaches a similar high point again. It is seen as a bearish signal, indicating that the price may soon start to decline. Traders should be cautious when they spot this pattern, as it could be an indication of a trend reversal.
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