Altsignals

EDUCATION - TOP REVERSAL PATTERNS ⚡

Education
BINANCE:BTCUSDT   Bitcoin / TetherUS
At the end of a trend, there is a typically a reversal pattern indicating to us that the trend is about to reverse. There are 3 main patterns that you NEED to know.



1. Double Top / Double Bottom

A double top /bottom pattern is a chart pattern that consists of 2 consecutive peaks of similar height indicating that there is not enough buying/selling pressure to surpass the extremes of the price. This leads to a reversal in trend.

Double top is a bullish to bearish trend reversal.
Double bottom is a bearish to bullish trend reversal.

For a safe entry, entry would be after the break of the neck line (the last swing point) which is a confirmation that the it is a valid double top /bottom pattern.

Double Top:


2. Rising Wedge / Falling Wedge

A rising/ falling wedge is a chart pattern that occurs when price is making higher highs and higher lows (in an uptrend – rising wedge ) and lower lows and lower highs (in a downtrend – falling wedge ). As the pattern progresses in the wedge , the range of the price contracts and is confined between 2 lines which get closer. Price eventually breaks out of the wedge and creates a reversal.

Rising wedge is a bullish to bearish trend reversal.
Falling wedge is a bearish to bullish trend reversal.

For a safe entry, wait for a breakout of the wedge to confirm the validity of the wedge pattern.

Rising Wedge:


3. Head & Shoulders / Inverse Head & Shoulders

A head and shoulders pattern is a chart pattern that appears as a baseline with three peaks. The outside two peaks (shoulders) are close in height and the middle is highest.

A normal head and shoulders is a bullish to bearish trend reversal.
An INVERSE head and shoulders is a bearish to bullish trend reversal.

For a safe entry, it is often advised to enter on the break of the neckline as that would be confirmation of the head and shoulder pattern.

Inverse Head & Shoulders:

Do your best to find them in your analysis!
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Comments

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Good clear diagram with good clear explanation.
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+8 Reply
Altsignals AngusMcK
@AngusMcK, Thank you, Angus!
+2 Reply
Excellent reference document - beautifully illustrated! Thank you so much for sharing this.
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+4 Reply
Altsignals loudon3
@loudon3, Thanks mate
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nice analysis
+3 Reply
@Ezzykeys indeed a good one
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Thank you. Very helpful
+3 Reply
Good information for new comers
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