CRYPTOCURRENCY
Continuation Patterns: A Guide For Day Traders
Continuation models: A guide for day traders on the cryptocurrency market
The cryptocurrency world is known for its volatility and unpredictability, which makes it a difficult market for day merchants. However, understanding the continuation models can provide valuable information on price movements and help traders make informed decisions. In this article, we will explore continuation models, how they work and certain key strategies to integrate them into your commercial approach.
What are the continuation models?
Continuing models refer to a specific type of technical analysis model that appears when a trend is broken or rejected in favor of another. These models are often characterized by a “folded” or curved shape, indicating that the price is trying to get out of a resistance zone or a previous support area.
Types of continuation models
There are several types of continuation models, including:
- Head and shoulders : A classic model where high and low prices form a “head” and “shoulder” respectively.
- Reverse head and shoulders : The opposite version of the head and shoulder pattern, where the “head” is above “the shoulder”.
- Wave model
: A wavy model or zig-zag which forms when the price comes out of a previous resistance zone with an increasing momentum.
- Trendy line breakout : When a trend line is broken and new high prices are formed.
How to identify continuation models
To identify continuation models, you must analyze various technical indicators, such as:
- Middle Mobile (Mas) : The average price of the part on a specific period can help you identify trends and resistance and support levels.
- Relative resistance index (RSI) : RSI measures the magnitude of recent price changes to determine the conditions of overchat or occurrence.
- Bollinger bands : These bands highlight volatility and provide an indication of the feeling of the market.
Key strategies to incorporate continuation models into your trading approach
Once you have identified a continuation model, here are some key strategies to integrate it into your commercial approach:
- Take profit : Set a level of profit depending on the break point or when the price reaches a predetermined target.
- Set a loss of stop : Define a loss of stop at a specific price level to limit potential losses if the trend is reversed.
- Continuation of trades : Use continuing models as a trigger to enter new professions, such as the purchase or sale of coins according to a specific model.
Example of a continuation model in action
Let’s see an example where we identify the reverse head and shoulder model in Bitcoin (BTC / USD) at $ 28,000. We note that the price forms a “head” above the previous resistance level ($ 29,500), followed by a “shoulder” below ($ 27,800). However, if we get out of this model, we can take advantage of the increase in the momentum and enter a long position.
Conclusion
Continuing models are an essential tool for day traders in order to better understand price movements on the cryptocurrency market. By understanding these models and incorporating them into your commercial approach, you can make more informed decisions and increase your chances of success. Do not forget to always use risk management techniques and to remain disciplined when entering trades.
Additional resources
For more learning, here are some recommended resources:
* Cryptoslate : A website dedicated to news, analysis and ideas of cryptocurrency.
* Coindesk : A leading online publication for new cryptocurrencies and trends.
* TradingView : A platform offering real-time graphics, technical indicators and trading ideas.
