Different Crypto Chart Patterns for Technical Analysis

What are the different crypto chart patterns for technical analysis? Your journey of a successful crypto trader starts with technical analysis.

This is one of the vital skills that every crypto trader should possess.

This will help you to spot the right chart patterns, interpret them most accurately and decide on your trading moves according to it.

This skill will also allow you to evaluate the trends and gain valuable insights which will help you to predict a probable continuation of a trend or a complete reversal.

Remember, crypto trading is largely dependent on price prediction and for that you will need to read the price charts carefully.

Ideally, price patterns are created when the crypto traders buy and sell at a specific level which oscillates the price between them.

When this price breaks out of the pattern, it indicates a major change in sentiment.

Patterns over longer periods are more reliable than the patterns appearing on an intraday chart.

These price patterns, if analyzed accurately, can remove the uncertainties from trading and increase your chances to make profits.

Therefore, it is important to do proper technical analysis.

For that, you will need to read the different chart patterns, and most importantly know the different types of patterns and what they signify.

If you do not have any clue about it, you are fortunately in the right place.

This article will cover some of the most important and most popular crypto chart patterns that are used by the crypto traders and investors on a daily basis.

This article also includes some of the best practices that will make your job much easier and your knowledge much more comprehensive.

The Different Crypto Chart Patterns for Technical Analysis

The Different Crypto Chart Patterns for Technical Analysis
Credit: QuoteInspector.com

You may have come across terms like bullish flag, head and shoulders, rising wedge and more when you meet people who are engaged with crypto trading for quite some time now.

If you wondered what all these terms mean then consider that you are lagging quite behind them in the race.

These are actually the different chart patterns that all traders need to analyze for accurate price prediction and increasing their profitability chances.

Here are some of the top chart patterns that are commonly used by the crypto traders all over the world compiled for you for your better understanding.

In this article, you will find the top twenty chart patterns that are commonly used along with their significance.

These 20 chart patterns can be categorized into 4 specific groups such as:

  • Triangle Chart Patterns – Six in number
  • Rectangle Chart Patterns – Six in number
  • Pole Chart Patterns – Four in number and
  • Exotic Chart Patterns – Four in number.

Well, do not fret thinking that there are a lot of chart patterns to read.

Ideally, there are only 10 of them because the other chart patterns are simply inverted. Here they are.

Triangle Chart Patterns

There are six such chart patterns that fall into this category and half of them are inverted variants.

Ascending Triangle:

This is ideally a bullish indicator. When you read this chart pattern you may see the indication of a continuing upward trend.

This is a very common type of chart pattern that is used by crypto traders who especially deal in bullish markets.

When there is an upward trend, there is a first resistance and the prices reverse until the support of it is found.

The price reverses the direction and continues to move upward till it finds the second resistance.

This second resistance may be at the level of the first resistance or near to it.

This actually shapes into a horizontal line in the ascending triangle pattern.

When the price reverses the direct and eventually finds the support, it is a bit higher than its previous level.

The pattern is completed only when price breaks through the preset initial resistance level in the pattern.

Descending Triangle:

This chart pattern is just the opposite or inverse of the ascending triangle and therefore is a bearish indicator.

It indicates the continuation of a downtrend.

The first resistance in a downward trend sets up the horizontal resistance for the remaining chart pattern.

Once again, the price reverses the direction till it finds the first support which is at the highest point.

The second support is found when the price reverses at the same level as the first resistance.

The price reverses again to find the resistance at a level that is lower than before.

This creates the downward angle of the triangle.

This pattern is completed only when the price reverses once again to break below the horizontal line set in the pattern.

Bullish Symmetrical Triangle:

It is needless to say that this is also a bullish indicator which points out the continuation of an upward trend.

When there is an upward trend, the price reaches the highest price to find the first resistance in the pattern.

When the price reverses, the first support is found at the lowest point in the pattern.

From there the price reverses again to find the second resistance which is also lower than the first resistance.

The downward angle of the pattern is created by these two resistance points which give it a shape of a symmetrical triangle.

The second support level is above the first support which forms the upward angle of the triangle.

This pattern is completed when the price reverses the direction from the second support and eventually breaks the upper line of the triangle.

Bearish Symmetrical Triangle:

Just as the name signifies, this is an inversion or opposite of the above triangle.

Therefore, it indicates a downward trend continuing in a bearish market.

During such a downtrend, the price finds the first support which is ideally the lowest price of the crypto.

The price then reverses to find the first resistance which is at the highest point in the pattern.

In this pattern, the second support is at a higher level in comparison to the first support. This forms the upward angle of the pattern.

When the price reverses direction, the second resistance is found which is below the first resistance.

This creates the descending angle of the pattern.

The pattern is completed when the price reverses and crosses the bottom angle of it to wait for a low and bearish trend.

Rising Wedge:

This is a bearish indicator which is not a very commonly found chart pattern.

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However, when found, it typically indicates either an upward or a downward trend.

In this pattern the first point itself is the first support level and is also the lowest point in it.

When the price reverses, it sets up the first resistance level which is also the lowest level of this pattern.

When the price reverse finds the second support, the first and the second support together creates the base angle of the rising wedge.

When the price reverses to find the second resistance level, it is at a higher point than the first resistance.

The pattern is completed when the price reverses and breaks through the base of the wedge.

Falling Wedge:

This bullish indicator is the opposite of or inverted Rising wedge.

This can also be found in either an upward or a downward trend and is not a very common chart pattern.

However, this chart pattern forms after an upward trend or after a downward trend.

Here the first resistance is at the highest point and when the price reverses, it finds the first support.

This is ideally the highest support level of the pattern.

The price reverses and continues to move upward until it reaches the second resistance level.

This second resistance level is however at a lower point than the first resistance point.

In this case, it is these two points that form the top angle of the falling wedge.

When the price reverses, it finds the second support which is below the first support level which creates the base angle of the falling wedge.

The pattern is completed when the third resistance in it typically breaks through the falling wedge from the upper angle.

Rectangle Chart Patterns

Just like the Triangle chart patterns, the rectangular chart patterns are also of six different types.

And, half of these patterns are simply the opposites or inverted counterparts of the other half.

Bullish Rectangle:

This is a very common rectangle chart pattern that signifies a continuing upward trend.

In such a situation, the price moves on to find the first resistance that forms the base of the horizontal line.

This however becomes the resistance level for the remaining part of the bullish rectangle pattern.

As and when the price reverses and reaches the first support it also forms the base of a horizontal line.

This line then becomes the support level for the remaining part of the chart pattern.

When there is an upward movement of the price from the first support, it reaches a point which is at the same level as the first resistance and becomes the second resistance level.

When the price reverses direction and moves downwards, it once again reaches a point to find a support that is similar to the first support.

The pattern is completed when the price moves upward after reversing its direction and breaking through the upper border of this pattern.

Bearish Rectangle:

Once again, the name suggests that this is an inverted bullish rectangle and is a very common chart pattern that signifies the continuation of a downward trend.

During the downward trend, the prices move to find the first support which forms the base of the horizontal line.

This becomes the support level for the rest of this bearish rectangle pattern.

When there is a price reversal, it reaches the first resistance which also acts as the base of the horizontal line which will become the resistance level for the remainder of the pattern.

If the price moves downwards during reversal and finds the second support level, it will ideally be at the same level of the first support.

And, if it moves upwards during a price reversal and finds the second resistance level, it will be at the same level as the first.

The entire bearish rectangle pattern is completed when the price reverses its direction and breaks through the lower border of this pattern.

Double Top:

This is also a very common chart pattern which indicates the reversal in the price direction.

When there is an upward trend, the price moves on to find the first resistance level which forms the base of the horizontal line.

This will become the resistance level for the entire pattern.

When the price reverses direction and finds the first support it will form the base of the horizontal line and will act as the support level for the remaining chart pattern.

When the price moves upward during a reversal, it will find a second resistance at a similar level as the first one.

The entire pattern is completed when the price reverses direction to move downward till it breaks through the preset support level of the pattern.

Double Bottom:

The double bottom chart pattern is just the opposite of the double top chart pattern which is another common type of pattern found that indicates that the price direction is reversed.

The price will find the first resistance in a downward trend in this specific pattern.

This resistance forms the base of the horizontal line that also becomes the support level of the entire pattern.

When the price reverses and finds the first resistance it forms the base of the horizontal line and becomes the resistance level for the remaining part of the pattern.

When the price reverses direction and moves downward, it finds the second support.

This support is at the same level as the first support.

The chart pattern is completed when the price changes direction and moves upward till it breaks through the set resistance level of the pattern.

Triple Top:

This is a bearish indicator and is not commonly found.

However, this type of chart pattern signifies that there is a reversal in the direction of the price.

It happens in an upward trend in the market when the price finds the first resistance that becomes the basis of the horizontal line which also becomes the resistance level for the entire pattern.

When the price reverses to find the first support it also forms the base of the horizontal line that will become the support level of the remaining pattern.

When the price changes direction and moves upwards, it reaches a point that is similar to the first resistance level to find the second resistance.

When the price again changes its direction to move downward, it finds the second support at a point which may be at a point which is at a higher or lower point than the level of the first support.

And, when the price moves upwards it continues to do so until it reaches the resistance level which is at the same level as the first resistance.

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The pattern is completed when the price moves downwards after reversing direction to reach the set support level and breaks it.

Triple Bottom:

This is an inverse of the triple top rectangle chart pattern that is considered to be a bullish indicator but is quite an uncommon pattern.

This type of chart pattern shows the direction of price reversal.

In a downward trend, the price finds the first support to form the base of the horizontal line that will become the support level of the rest of the pattern.

When the direction of the price reverses it moves on to reach the first resistance to form the basis of the horizontal line that will become the resistance level for the remaining part of the chart pattern.

When the price moves downwards after changing direction it reaches the second support which is at the same level as the first support.

And when it moves downwards after reversal to find the second resistance, it is ideally at a point higher or lower than the first resistance.

When the price moves upwards after reversal, it reaches the support level which is at the same level as the first support.

The chart pattern is completed when the price reverses its direction and moves upward till it breaks the resistance level that is preset in the pattern.

Pole Chart Patterns

In this specific category, there are four chart patterns of which two are just the inverse of the other two.

Bullish Flag:

Just as it is suggested by the name, a bullish flag is a bullish indicator.

This commonly used pattern shows a sharp and extended upward trend.

When the price moves on to find the first resistance, it forms the pole of the flag in this pattern

And, when the price reverses in small increments the pattern resembles a flag.

This is recognized by lower lows and lower highs until the support is found.

The pattern is completed when the price turns around to change its direction and moves upward till it breaks out of the pattern.

Bearish Flag:

It is needless to say that this is the bearish indicator which is the inverse of the above.

This commonly found chart pattern indicates a prolonged and sharp downward trend.

The price here finds the first support and forms the pole of the flag of this pattern but is inverted.

When the price reverses once again in short increments, the flag appears on the chart pattern and can be recognized by the higher highs and the higher lows in a slender flag-like shape until the price finds the highest resistance level.

The pattern is completed when the price moves downwards after reversing direction to eventually break out of the pattern.

Bullish Pennant:

This is a very common chart pattern as well and is found in a bullish environment which shows a prolonged and sharp upward trend.

The price here finds the first resistance that forms the pole of the pennant.

When the price reverses in short increments it finds the first support level.

When there is a short increment in the price reversal you can see the pennant-like shape appear on the chart.

This is recognized by the higher lows and lower highs in the narrow pennant pattern.

The pattern is completed when the price reverses direction and moves upward to break out of the upper portion of the pennant.

Bearish Pennant:

An inverse of the bullish pennant, this very common bearish indicator shows an extended and sharp downtrend.

The price moves to find the first support to become the pole of the pennant.

When the price reverses in short increments it will find the first resistance level.

The pennant-like shape appears on the chart due to the short increments in price reversals.

This is recognized typically by higher lows and lower highs in the narrow pennant pattern.

The pattern is completed when the price moves downwards by reversing direction so that it can eventually break out of the pennant from the lower part of it.

Exotic Chart Patterns

This specific category of chart pattern also has four different types of chart patterns but two of them are just the inverse of the others.

Head and Shoulders:

This is actually a bearish indicator and it is not a very commonly found chart pattern. It indicates a reversal of direction of the price.

During an upward trend, the price moves on to find the first resistance.

This forms the left shoulder of the chart pattern.

And, when there is a price reversal in short an increment it will move on to find the first support level which will complete the shaping up of the left shoulder.

When the price moves upwards after a reversal, the second resistance is found by it at a point that is higher than the first and forms the head of the pattern.

And when the price moves downwards after reversal, it will continue to move that way until it finds the second support.

This is however at the same price or level of the first support. This completes the head formation.

However, when the price moves upwards after reversal till it finds the second resistance which is very near to the same price as the first one, it forms the right shoulder.

This chart pattern is completed when the price moves downward after changing direction until it breaks out from the lower portion of the right shoulder of the chart pattern.

Inverted Head and Shoulders:

This chart pattern is just the opposite of the above. It indicates the bullish reversal of price direction and is also not a very commonly found pattern.

When the price finds the first support in a downward trend, it forms the left shoulder of the pattern.

And, when the price reverses in short increments it finds the first resistance level which completes the formation of the left shoulder of the pattern, albeit inverted.

When the price moves downwards after reversal, it finds the second support which gives the shape of an inverted head to the pattern and this is at a point that is below the first support level.

However, when the price moves upward after reversal, it moves on till it finds the second resistance which is near to the same price as the first and completes the formation of the inverted head of the pattern.

And when the price moves downwards after reversal to find the second support which is typically near the price of the first support, it gives the shape of an inverted right shoulder to the chart pattern.

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Ultimately, the pattern is completed when the price moves upwards after reversal till it can break out of the upper part of the inverted right shoulder of the chart pattern.

Cup and Handle:

This specific type of chart pattern is a bullish indicator which shows the continuation of the pattern.

This is also not a very common pattern but is still good to know about it.

When there is an upward movement, the price will find the first resistance which will give it a shape of the edge of a cup.

The price reverses its direction in short increments and finds the support at the lowest point of the pattern which gives it the shape of the bottom of a cup.

When the direction of price reverses, it starts to move upwards in short increments till it reaches the second resistance which is at the same level as the first resistance. This completes the formation of the cup.

Now, the handle of the cup is created by the downward movement of price till it reaches its support which is typically at a higher level than the first support.

The entire pattern is completed when the movement of price reverses and moves upward in order to break out of this cup and handle formation of the chart pattern.

Inverted Cup and Handle:

Needless to say, it is the opposite of the Cup and Handle chart pattern. This is a bearish indicator of a continuation of a pattern.

However, this is also not a very commonly found pattern.

When there is a downward trend, the price moves to find the first support. This outlines the edge of an inverted cup.

The price direction reverses in short increments and finds the resistance which is at the uppermost point in the chart pattern.

This forms the inverted bottom of a cup.

When the price moves downwards after the direction of price reverses in short increments and finds its second support, this is ideally at the same level to the first support. This completes the formation of the inverted cup.

The handle shape is created due to the movement of the price upward till it reaches its resistance which is at a lower level than the first resistance.

The pattern is completed when the price moves downwards after reversal to breakout eventually from the cup and handle pattern.

Some Other Pattern Types:

Here are a couple of other types of chart patterns which you should also know about.

Diamond Trading Pattern:

This is a specific type of crypto trading chart pattern which indicates the reversal in the trend of a crypto asset in general.

The unique aspect of the diamond chart pattern is that it is both bullish and bearish.

This is because it can exist on the tops and bottoms of both the markets.

However, the bearish diamond pattern is good to use because it is more common than the bullish indicator.

In this pattern you will need to find out the breakout which typically is not when the line is broken by the candles.

Instead, you will need to focus on the height of the diamond.

Then you will need to project it below the point where the diamond is broken by the price.

At this point, you can place a short order because the price may continue to decline once it goes below the breakout level due to the confirmation provided by the high volume.

Rounded Bottom Pattern:

This specific type of crypto chart pattern is very much the same as the cup and handle pattern with the only difference that this specific pattern actually has a U shape.

There is no ‘handle’ that will indicate the breakout. On the contrary, it is a round bottom breakout that is shown from the neckline resistance.

This type of chart pattern is typically used for confirming trend reversals in a long-term bearish market.

Though this is not the most accurate chart pattern, you can find it very easy to trade when you use this pattern.

All you have to do is look for the breakout higher than the neckline resistance to get the right buy-signals.

However, please do consider the profundity of the rounded bottom for a better interpretation and results.

Ideally, in this specific chart pattern it is the interpretation of the trader that matters.

Now that you know about the different crypto chart patterns to study, you should also know the best practices to follow so that you can define the patterns in your own convenient way.

Since these chart patterns are more subjective in comparison to the technical indicators, you may not have a standard definition for each.

Therefore, you will not know the ideal structure of a head and shoulders pattern, for example, or when the price may break out from the ascending triangle.

These best practices will help you to define the patterns in the best way possible.

These are:

  • Seek confirmation always because market sentiments should not be the only basis to make a trading decision.
  • Always look at the volume because it plays a vital role in the analysis of the chart patterns. For example, if there is a breakout at low volume it could be a false one or a head fake.
  • Set up stop loss levels always to have better results.

And, always try it out in the form of paper trading so that you are familiar and comfortable with the chart patterns before you put in your money to trading ideas that involve these patterns.

Also, you will be better off if you download from a reliable source your own crypto pattern cheat sheet to use it as a reference.

Conclusion

You should know about different chart patterns since they provide different info and insights on market psychology and dynamics.

Through this article you have come to know the most popular ones. It will make it easier for you to achieve the best results.