The #BTC has risen in price in recent days, with a significant price increase in the last 4h, which is a sign of recovery?
Let’s start immediately from the price chart in image 1:
Image 1: tradingview – btc / usd – timeframe 1h – 2018-07-02
What can be seen is:
- A double bottom on the price chart, followed by the breaking up of a triangle, both bullish signs;
- The overwhelming RSI, due to the last climb;
- The ADX which still marks a weak trend;
Given these factors, an example of trading for those who are out of the market, is to stay out waiting for a probable downward correction of prices.Then decide an entry with the appropriate stop loss.
For those who are in the market, it may instead be good to stay flat, also with the appropriate stop loss, waiting to understand if the climb continues.
We at Cryptograph Team are currently in the recato and remain flat.
With this article we continue with the family of inversion patterns.
DOUBLE TOP / BOTTOM
The double top / bottom is another inversion figure. Like the head and shoulders, it’s consequently formed by an excessive inclination of the uptrend / downtrend.
In case of double top :
- Increase the excursion between the tops;
- as we go up to the first top we have an increase in volumes, which decreases with the fall in prices;
- the second top has an increase in volumes but lower;
The trend in volumes in this case must follow the price trend.
The figure is completed when the support line, generated by the minimum of the figure, breaks down.
Image1: example of double top on BTC – daily timeframe
The double bottom is a inverse figure, moreover as the bottom head and shoulders occurs at the end of a bearish trend.
It is formed as follows:
- two large downward fluctuations and a trend in volumes that on average is increasing;
- after the first price drop with low volumes there is a recovery with volumes that on average increase.
- The second descent also has low volumes.
A possible target can be obtained the distance of the peak with respect to the maximum of resistance.
Another possible target is identified by the sum of the two peaks.
The figure is completed overcoming the resistance line traced making it pass for the maximum reaction (the maximum of the ascent between a bottom and the other).
NB: the two top / bottom have about the same height
TRIPLE TOP / BOTTOM
The triple top is also an inversion figure generated similarly to the double top.
The main difference is that it creates a third top / bottom that however has very low volumes.
ROUNDING TOP / BOTTOM
This is an inversion pattern that, compared to previously seen, is more gradual and therefore does not involve a marked change in the trend. Usually we have the termination of trends that last very long.
TOP rounding is formed as follows:
- Start with high volumes
- Half of the pattern has the absolute minimum of volumes
- subsequent increase in volumes on the end of the pattern.
The BOTTOM rounding instead:
- start with low volumes
- at the absolute minimum there is a clear increase in volumes
- next volume of the volumes at the end of the figure.
- Ettore Coliva, Lucio Galati, “ANALISI TECNICA FINANZIARIA”, 1th edizione del 1992, UTET Libreria (Pag 18 – 19).