JamesRkaye

The "Bart" pattern in crypto. Why they form and how to spot them

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
I've noticed a meme develop in the crypto community around this unusual price pattern seen almost extensively in crypto currencies, characterized by its sudden rise in price, sideways movement, then sudden drop. However, from my experience similar patterns are rarely seen in higher liquidity markets like Forex.

It is possible that this pattern is sometimes created by institutional manipulation, as it is similar to the manipulation patterns pointed out by Richard Wyckoff in the stock market of the very early 1900s. The main thing to be cautious of is that the patterns are designed by manipulators to catch out retail traders, because in a low liquidity environment they have to shake retail traders out of their positions in order to fill the manipulators orders, as with limited liquidity a large order can't be made without pushing the price away from where the manipulator would like.

There are a few subtle things to look for so that you don't get caught on the wrong side of a "bart". First of all it should not be mistaken as a bull flag , a useful way to tell the difference is to think of where the liquidity pools are, and notice how the market reacts to them. A liquidity pool is where there will be a large amount of buying or selling at a level, this can also be seen in an order book, in a "Bart" (or distribution pattern) the liquidity pool will be located above the first high. Above here breakout traders will look to buy and short stops which were placed above the high will be triggered. If this liquidity pool is suddenly rejected back down multiple times this is a sign of a "stop loss hunt" and that manipulators are taking advantage of this high buying liquidity to distribute supply into the market in the form of shorts. This increase of supply will eventually push the market down. Notice that in a bull flag the selling liquidity pools are bought, and the high is left to break out.

You could try shorting using wyckoffs techniques, however the most important thing I want people to learn from this is DO NOT BUY if you see this, as the pattern is designed by manipulators to look like the perfect moment to buy for retail traders. Also, be careful not to put your stop loss in a liquidity pool, as manipulators are hunting for these.

The link below has some more in depth information on Wykoffs accumulation and distribution patterns and how to trade them.
http://stockcharts.com/school/doku.php?i...