What is General Pattern Failure?
General Pattern Failure occurs when a chart pattern breaks out, fails to hit target, quickly reverses then rejects off that same breakout level back inside the pattern continuing in the opposite direction of the breakout.
Pictured above in the original chart is a normal breakout on a Inverse Head And Shoulders Pattern while the lower very right examples show General Pattern Failure on the same pattern. Note how the first example has a Bullish Retest (A) where price actually increases at the breakout while the second example is coming back inside that area and finding resistance back inside of the pattern, (Bearish Retest, (B) this then leads to price falling back inside with strong volume/momentum.
General pattern failure can also be considered a Liquidity Grab or can be referred to as a “Fake Out”.
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Other Examples:
The below image shows General Pattern Failure occuring in the opposite direction on #Bitcoin at $11000 on a Head & Shoulders Pattern.
The below image shows General Pattern Failure occuring on BNB Binance Coin (Great Example, Click the image to see the trade play out)
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Final Thoughts:
So by using the above methodology we have a potential clue here for Bitcoins next movement, I am watching the 49-50k area to see if we continue to fall or see a short term push (if we get back above the Inverse Head & Shoulders Pattern, $53000 is the next area of interest).
Learning to trade patterns such as these can provide great opportunities if you understand price action and how to identify the key areas of the pattern that other traders and investors may be focusing on too, these areas become important psychological levels on the chart that allow us to map out potential trades.
General Pattern Failure occurs when a chart pattern breaks out, fails to hit target, quickly reverses then rejects off that same breakout level back inside the pattern continuing in the opposite direction of the breakout.
Pictured above in the original chart is a normal breakout on a Inverse Head And Shoulders Pattern while the lower very right examples show General Pattern Failure on the same pattern. Note how the first example has a Bullish Retest (A) where price actually increases at the breakout while the second example is coming back inside that area and finding resistance back inside of the pattern, (Bearish Retest, (B) this then leads to price falling back inside with strong volume/momentum.
General pattern failure can also be considered a Liquidity Grab or can be referred to as a “Fake Out”.
-----------------------------------------------------------------------------------------
Other Examples:
The below image shows General Pattern Failure occuring in the opposite direction on #Bitcoin at $11000 on a Head & Shoulders Pattern.
The below image shows General Pattern Failure occuring on BNB Binance Coin (Great Example, Click the image to see the trade play out)
-----------------------------------------------------------------------------------------
Final Thoughts:
So by using the above methodology we have a potential clue here for Bitcoins next movement, I am watching the 49-50k area to see if we continue to fall or see a short term push (if we get back above the Inverse Head & Shoulders Pattern, $53000 is the next area of interest).
Learning to trade patterns such as these can provide great opportunities if you understand price action and how to identify the key areas of the pattern that other traders and investors may be focusing on too, these areas become important psychological levels on the chart that allow us to map out potential trades.
Comment:
This idea played out very well, if you press play you can see the result.
