Crypto Technical Analysis Tutorial (Top chart patterns you MUST know)

In this video, we are going to take a deep dive into the world of technical analysis. This is a way of looking at cryptocurrency price charts. And what we're going to do is we're going to identify key patterns, the 10 top key patterns that you have to look out for in order to get an advantage in this market. In many ways, what TA does is it allows you to find where the big players are going and what they are thinking. And with this information, all information is power, you can make educated guesses at when to defend your positions in the market. And more importantly, of course, when to take a little bit of profit, how to find those key points when cryptocurrency prices are going to move up to a big advantage of it. So what we got is we got the top TA formations that you have to pay attention to them. So make sure you watch till the end of the video so you don't miss out on a single formation that is extremely important. You don't want to miss out anything on TA. And of course, if you guys like more videos covering TA and stuff, leave a comment down below. We have actually quite a lot of materials prepared up. So we will also want some input into what you guys want as well. And of course, everything covered here is our opinions and not financial advice. Let's hit that like button and let's get started. I have identified the top nine mostly seen chart patterns that you should be aware of. Ascending triangle. Ascending triangle is a bullish continuation chart pattern and is formed when you see higher lows and meets resistance at the same price level. This is because buyers are more aggressive than sellers. That's why it's forming this ascending line. The pattern completes itself when price breaks out of the triangle in direction of the overall trend. We may not be able to break through the resistance line at first. It may take a few runs before establishing new ground and new heights. Usually, the longer the pattern it takes to form, the more significant it will be. Descending triangle. It represents a bearish market down trend and sellers are more aggressive than buyers. You can easily spot the pattern when we have lower highs and consistently hitting the same support line. The downward sloping trend line shows that sellers are slowly pulling the price down. At the lower trend, it often approaches this level and bounces off until the breakout eventually occurs. Some traders will long when they see an ascending triangle forming and short the market when they see a descending triangle forming. But remember, each pattern has its limitations. It could be a false breakout and there is always a chance that the price moves sideways for an extended period of time. Wedge A wedge is a representation of short and middle term reversal in the movement of price in the market. It forms as an asset price movements tighten between two sloping trend lines. The two forms of wedge pattern are a rising wedge, which usually signals a bearish reversal, or a falling wedge, which usually signals a bullish reversal. A rising wedge pattern is a consolidation price pattern formed when price is found between two rising trend lines. This pattern generally signals that an asset price will eventually decline more permanently, aka a bearish trend is forming, which is demonstrated when it breaks through the support line. It can spot the pattern by linking the higher highs and lower lows using a trend line assembly to us in narrowing point. In this case, the line of support is steeper than the resistance line. The falling wedge pattern The falling wedge pattern appears within an uptrend when price tends to trade sideways. It is usually indicative that an asset's price will rise and break through the level of resistance. You can spot the trend by linking lower highs and lower lows using a trend line. You will find that two lines will slope downwards and converge. Some studies suggest that a wedge pattern will break out towards a reversal more often than two-thirds of the time, with a falling wedge being a more reliable indicator than a rising wedge. Double bottom A double bottom is a bullish reversal pattern that describes a fall, then rebound, then fall, then a second rebound again. It gives you a W shape, and it usually happens when it's the end of a downtrend and the beginning of an uptrend. The farther apart the two bottoms, the more likely the pattern will be successful. Double top Double top patterns appear at the end of an uptrend when the price reaches the previous resistance level, but fails to break through the resistance. As opposed to a double bottom, a double top will give you an M-shape like pattern, and it usually indicates an upcoming downward trend. To spot this pattern easily, first of all you need to find two distinct peaks of similar width and height, and then find the support price level or the neckline. The neckline is formed between the price low of the valley between the two peaks. If there's a break below the neckline, then we can confirm a double top pattern. Head and shoulders The head and shoulder pattern is a price reversal pattern that helps traders identify when a reversal may be underway after a trend has exhausted itself. The pattern has a very distinctive appearance, so there's a head, two shoulders, and a neckline. Typically speaking, the first and the third peak will be smaller than the second one, but they will all fall back to the same level of support, or otherwise known as the neckline. Once the third peak has fallen back to the level of support, it's very likely it will break out into a bearish downtrend. Some traders would choose to short the market once we have confirmation that we are breaking out of the neckline. Invest head and shoulders An inverse head and shoulders is similar to the standard head and shoulders pattern but inverted. It often signals a reversal of the asset following a bearish trend. The pattern takes its shape from a series of three bottoms, with the second bottom being the deepest. We also have the neckline, which represents resistance and is formed by connecting the three recovery peaks associated with three bottoms. One more thing to add is that if the right shoulder is higher than the left shoulder, it's usually a good sign that an inverse head and shoulder pattern will result in a clear breakout and reversal in trend. Next up, let's move on to some of the indicators that I found very useful to help me determine the future trend of the asset price. It has helped me identify when to enter or exit a trade in order to make a profit. RSI This is a very helpful indicator to actually help you predict the next trend in the market. It will give you a general idea when a breakthrough is going to happen. It's extremely easy to access. It's usually placed at the bottom of the chart in order to directly compare the price trend. I've been using the RSI 14 day period quite a lot lately. So basically a zero RSI value means the price move lower or 14 day period and there are no gains to measure. RSI is 100 when the average loss equals zero. This means price move higher or 14 periods and there are no losses to measure. The RSI is often accurate when indicate in market is about to reverse. It's always going to display as the line ranging from zero to 100. Typically speaking, if it's trading at above 70, it could be an overbought with a lot of FOMO in the market and possibly there will be a reverse change coming very soon. And in this case, it's going to see this massive red bars. And on the other hand, if it's below 30, it indicates it is an oversold situation and it could be time for you to stack up some of the crypto. And that's why we have seen this upward trend. So the RSI really gave me an idea to see if there's just a lot of emotions in the market. Whether it's FOMO or FUD, it tells me not to chase the pump or when to buy in when I see it pull back. EMA ribbon line. It displayed the average price of a token over a set period of time and uses this as a gauge to confirm momentum. I have set my EMA ribbon line to be 25 days, 30, 35, 40, 45, 50 and 55 days. Now, this period is more suitable for short term to mid term traders. If you're more like a long term trader, then you might want to increase the period to something like 200 day EMA. Well, my setting here is a little different. See, I've chosen the rainbow color. This is not the default setting. I just find the rainbow color easier to read. So what all these lines do is to help me smooth out the noise when I'm reading the chart. It could be seen as resistance line or support lines. Understanding the EMA ribbon line is equally simple as the RSI. So in an upward trend right here, you can see the price is always above the ribbon lines. It means the bulls are in total control of this situation. Therefore, you can continue buying the asset as long as trading above these moving averages line. Similarly, in a bearish trend we have right here, the price will always go below the EMA ribbon line. The best thing about EMA ribbon lines is that you will be able to tell if the trend is about to come to an end. You can see a flip is happening. The EMA 25 day line is going below the 55 day line. And this is basically a warning here that the bullish trend is about to come to an end. Another thing you need to pay attention is the width of the EMA ribbon line. The widening of line means the trend's strength is increasing, while the narrowing lines means the trend is about to lose its momentum. TA is particularly useful for finding the moving averages, the momentum, the support and resistance in the market. But none of these indicators are perfect. There are literally hundreds of different price patterns and indicators out there. They are not crystal balls. Each of them has its own limitations and own use. Play around with them. Understand which indicator suits your trading strategy. In my opinion, TA is a terrific tool, but much more effective when combined with fundamental analysis. As always, don't forget to have an amazing day. Smash up the like button and subscribe to the channel if you haven't already. Follow me on Instagram, Twitter and the CryptoGems video channel. And see you guys very soon.