I've been trying to make sense of this trading channel all day and I will admit to have not bought in at the first yellow circle, or at any point during this channel because it felt so wrong to me that it was even forming. Clearly that was a mistake, one I wish I could turn back the clock on for a few hours at least, however I am happy I resisted the urge to FOMO and go against my gut instincts. That being said, I clearly became a victim of FUD instead, so how can I and other newbie traders avoid FOMO and FUD? What can we take away from this channel as we watched it form in real time with very real disbelief? My answer: The Rule of 3.
The one thing that seems very consistent with any major dip or rise is that there are cascading effects. The first 2 cascades in a descending channel, or "dump", can and should be ignored as they are very unlikely to be reversals with that kind of volume being sold. The 3rd cascade, the 3rd bottom however, seems to be a safe buy in point that even if it creates more cascades, you can ride them with a reasonable return at each new peak created. The true bottom therefore is never missed if you buy the 3rd one! Let's say though it only takes 2 cascades and it forms a double bottom, what then? That is a very simple solution: BUY!!! Double bottoms no matter how violent, steep, or voluminous the price movement a double bottom is always a clear signal that there will be a rise immediately after!
As long as you buy at a double bottom you can be guaranteed a profit! If you buy at a 3rd cascade do not get distracted and potentially get sucked into a 4th or 5th cascade or more.... That being said the 3rd Cascade almost always results in the trend reversal, or an immediate short term bounce back up to liquid the dip!
The same holds true for rising channels! You can HODL from your perfectly executed double bottom or 3rd cascade, or you can watch the 5 and 15 min charts to look for "Spikes" in the green. I advise you to ignore the 1st cascade on an upward trend as the sell off is typically less than the fees to trade, however the 2nd one can be sold and bought back into for usually a minor gain of at least .5%. That being said only during massive FOMO Rally's, such as the beginning of this month, will a price simply go higher with absolute minimal correction or pull back. Short of those massive moves, it seems that the rule of 3 applies to rising channels as well. The key reason for this? The double tops that form after the 3rd cascade up! That also being said a rising channel comes to a close 99.9% of the time with a double top. The major risk there if you miss it or HODL, is that if you are doing so on the 3rd cascade or higher, it created a local High for the charts/day, or there is very little volume, you could get caught in a major sell off that could be brutal to your investment!
The best part of this trading pattern? It takes into account any sort of market movement that can form! Double bottoms simply prove that the price wants to go higher, regardless of the "why". Double tops show that the price wants to consolidate, retrace, pull back, or just breath. Even if you get a Triple top or bottom, the trend will change! "But what about those instances where a Triple Top leads into a rising channel?" Given that you would have sold at the Double Top, and bought at the next dip, you shouldn't be missing out! Triple tops are a huge signal that unless a major bull rally is in effect, or its parabolic, will result in a price decline. When you see high trade volumes on your exchange and constant efforts to break resistances, by all means HODL! It makes sense to HODL when there are Millions of Dollars of coins being thrown at a resistance level! The purpose of this analysis is to highlight the most basic principles and trends that do not lie!
As I said before this is the best trading practice to take when in doubt about the behavior of the market. Triangles, Wedges, Channels, H&S, etc. tend to be false flags when it comes to crypto as well as a bullish trend. I cannot begin to count how many Wedges fell through or H&S were outright ignored! Is that manipulation? Is that Greed? Is it FOMO and FUD? Who knows but what I have learned through massive pain is that the Rule of 3 is the most consistent pattern, Double Bottoms are the safest buy in points, and Double Tops are the safest sell points! I imagine that with this trading pattern you would only miss the trading opportunities that occur because sudden change in volume. From what I can tell, looking back over the past few days and weeks, there have only been a handful of market reversals that didn't follow the "intended" direction. The majority of those are during sideways trading sessions within .5% (.25% dips and peaks).
With this trade pattern I was accurately able to predict price targets and movements, despite my earlier admission that I missed the entirety of this pump! I hope this helps you guys make some money, and improve your ability to track the ebbs and flows of the market!