Top 5 Most Common Reversal Patterns in Crypto!
If you spot them early and know their key features you can print.
Bookmark this thread - 1/11 🧵
2/ Price action moves in similar patterns. We can also call them fractals. They repeat over and over again.
This is why reading a chart is an art form.
This improves with time and it can help you spot market changes early. Let’s begin.
3/ There are two types of patterns in crypto or any market:
▫️ Reversal patterns
▫️ Continuation patterns
In this thread, I'll focus on the first category. There are 5 common reversal patterns that I'll explain next.
Knowing their distinguishing features is key to success!
4/ Here are the most frequent reversal patterns:
1. Head and shoulders (normal or inverted)
2. Double tops and bottoms
3. Triple tops and bottoms
4. Saucer shape or rounding bottom
5. Spike or V reversal pattern
Before you scout for them on a chart, know their prerequisites!
5/ A reversal pattern is valid if these prerequisites are present:
- a prior trend (uptrend or downtrend)
- an important trendline is broken
- bigger pattern in size or time = bigger reversal
- bottoms take longer to form than tops
- volume is more important on the upside
6/ Head and shoulders (normal or inverted)
A normal head and shoulders signals a top. An inverted one signals a bottom. This is probably the most common and reliable pattern.
In the images, you'll find an example using Solana's 2021 top, its key features and minimum target.
7/ Double Tops and Bottoms
A common pattern that is most frequent after the head and shoulders.
Bitcoin made a double top reversal pattern in 2021 that also included a massive bull trap. The price crashed as soon as the pattern was complete.
Key features in the images.
8/ Triple Tops and Bottoms
A much rarer pattern in occurrence compared to the first two and is a slight variation of the double bottom / top pattern.
In the example, BCH did a triple bottom in 2023. After the pattern was completed the price exploded. Barely any time to react.
9/ Saucer Shape or Rounding Bottom
While not as frequent, the saucer shape is a slow and gradual turn from down to sideways to up.
Measuring when this pattern is completed can be more difficult.
This pattern was recently seen on $SPK which was launched in June. See images.
10/ Spike or V Reversal Pattern
V reversals are hard to deal with because of how quick they happen. The price literally spikes and there is little time to react.
We saw it during the Bitcoin crash in 2020 and is common during tops or bottoms in crypto. Volume also spikes.
11/ The detailed guide is available in my recent newsletter. You can find the link in my bio. It's free to read!
More tips in the image and don't forget to hit a follow @DU09BTC for my next thread on continuation patters!
Which pattern is your favorite? Leave a comment.
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