Charts & technicals
Which crypto chart patterns actually matter?
Almost every pattern worth knowing is one of three ideas: compression before a move, continuation after one, or reversal at the end of one. Learning the three ideas beats memorising fifteen names, because a pattern is only a compact description of what buyers and sellers just did - it is not a prediction, and it has no meaning outside the structure it forms in.
Compression
- Triangles, wedges, pennants and flags. Range narrowing, volume falling, both sides waiting.
- What it tells you: a move is coming and roughly where the risk sits, since the opposite edge is a natural invalidation.
- What it does not tell you: the direction. Trading the break rather than predicting it is the whole discipline here.
Continuation
- Bull and bear flags, and the pullback to a broken level.
- What it tells you: the trend paused and is resuming, with a defined level to be wrong against.
- The most reliable family, because you are trading with structure rather than against it.
Reversal
- Double and triple tops and bottoms, head and shoulders, rounding turns.
- What it tells you: one side stopped being able to make progress.
- The least reliable family, because they only confirm after the fact and produce more false signals than the other two combined.
The two conditions patterns need
- Volume that agrees. A break on falling volume is a shape, not an event.
- Structure that agrees. A bullish pattern under a clear lower high is somebody else's short setup.
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