Candlestick chart technical analysis is a popular way of trading among crypto investors of all kinds. Despite the diversity of chart patterns, there are a few used by professionals and beginners alike on a regular basis. While no guarantees can be made, these formations can influence your results in both bear and bull markets, so knowing them is definitely not a disadvantage for most. Read on, as in this article we’ll explore the most used and popular crypto candlestick chart patterns and show you exactly what they look like.
Technical crypto chart analysis is popular thanks to its relative reliability and widely adopted culture. There are millions of day traders who follow the rules of these analyses, and can thus achieve consistent performance in most cases. Knowing, however, the most popular and widely spotted patterns can be of tremendous help, as these will be the patterns millions of others will be looking for, too, which could result in common action, and the anticipated outcome. Note that some of these patterns might look really simple, but that’s exactly the reason why they are so popular. With that in mind, let’s see the most used and popular chart patterns as of 2022.
This three-candle pattern is among the easiest ones to spot, regardless of trading experience. It’s characterized by three, around equally sized green body candles in an evenly rising order. Following this formation bullish price action is expected, however, a correction can also be the next short-term price follow up.
A Bullish Spinning Top is a classical shape that many beginners and professionals recognize. It is essentially a standalone, green body candle that has around equally sized, long wicks on either end. The long wicks indicate a fierce fight between buyers and sellers, which was eventually won by buyers as per visible from the green body.
An Inverted Hammer is somewhat of a relief for bullish investors and a bad omen for sellers, as it typically forms after a red candle dominated section. It has a long wick on the top of its small green body, but no wick on the bottom, which signals that sellers could not even push the price below its opening value, therefore buyers are likely in dominance.
The Three Black Crows are the inverse pattern of Three White Soldiers, as they are three around equally sized red body candles with an even, but slightly decreasing order right after one another. There is normally a longer bearish term expected after such a pattern, which contradicts the popular, but informal advice of “buying the dip”.
A Bearish Three Line Strike is actually a tricky one, as it usually provides false hope to investors that the Three Black Crows pattern turned around and the price action became bullish. However, that is not the case, as the large green candle following the Three Black Crows is some buyers using the opportunity to get back and secure some profits before jumping off again, causing the price to continue its way down.
This two-candle pattern is a popular one as it usually signals a massive, and somewhat unexpected price action reversal. A Bearish Kicker is characterized by a large, green body candle with little wicks and a small, red candle that opens significantly lower than the previous green candle.
A Doji Bar, or Long Legged Doji, is a typical neutral shape that often indicates sideways trading. This bar gives traders some time to evaluate their next move, or potentially check on other markets in the meantime.
A Spinning Top is not to be mistaken for the Bullish, or Bearish, Spinning Top. This two-candle pattern is basically one Bullish Spinning Top with smaller than usual wicks followed by a Bearish Spinning Top with shorter than normal wicks on either end. Note that all four wicks should be around the same length to confirm the pattern.
Technical crypto chart analysis can seem intimidating and overwhelming, but traders who know what to look for, and what others are looking for, often have better chances at becoming consistent in their activities, even in the short-run.
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