Introduction
Chart patterns constitute a foundational element of technical analysis, aiding traders in predicting potential future price movements by analysing past patterns. It is utilised in several trading options like crypto and stocks.
Chat patterns are the visual representation of the collective response of the market. Understanding these patterns gives us a peak into mass psychology, giving us better insight and thus better opportunities. Along with research on an organisation’s technological and financial aspects, studying chart patterns to understand the journey of the past and future is an important tool.
Role of Chart Patterns in Crypto Trading
With time, more and more technologies and tokens are coming as the crypto ecosystem evolves and expands. Crypto is a relatively volatile market. This is a realm of rapid risks and opportunities. Understanding the mass sentiments about a token and being able to guess the future plays a key role in the crypto market.
The crypto space is expanding fast and introducing new solutions and applications rapidly. Apart from trading in exchanges, crypto assets are now getting their value through the solutions they provide organically. All these advancements are reflected in the charts and thus it is valuable to understand them.
Read more: Beginner Guide To Crypto Technical Analysis
Common chart patterns in crypto
Following are some important patterns to look at. Along with the patterns, the table also shows the trading signals each pattern is giving.
| Pattern | Buy/Sell/Course reverse | Chart |
| Ascending Triangle | Buy |  |
| Descending Triangle | Sell |  |
| Symmetrical Triangle | Reverse Course |  |
| Rising Wedge | Sell |  |
| Falling Wedge | Buy |  |
| Bullish Rectangle | Buy |  |
| Bearish Rectangle | Sell |  |
| Double Top | Sell |  |
| Double Bottom | Buy |  |
| Bullish Flag | Buy |  |
| Bearish Flag | Sell |  |
| Bullish Pennant | Buy |  |
| Bearish Pennant | Sell |  |
Conclusion
Reading chart patterns is an important skill to have for traders. Having said that, one should also research different aspects of any token before investing. As tokens are evolving to have innovative solutions and real-world applications, there are several factors affecting their value and price. From project decisions, competitors, technologies used, adoption rate, regulations and global market situations; all should be considered while investing.
Though all these factors are reflected in a chart, reading it does not guarantee the desired outcome. This shows both the limitations and the importance of the patterns. As crypto assets’ values depend largely upon trading and crypto staking, charts certainly give traders important information and signals. Chart patterns let you connect the dots from the past and thus let you guess the future. This visually presents the mass sentiments and that’s how it becomes an important tool for the traders.
Read more: What is a Candlestick Pattern
Please note that the above-mentioned data points are not investment recommendations. Investors are required to conduct their thorough research before investing in any crypto-related asset.
If you found this blog to be useful, do share it with other like-minded crypto enthusiasts. Click on the button below to begin your crypto trading journey using ZebPay.
