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Neckline

📉📈 ZigZag IndicatorZigZag's primary goal is to focus on significant swings and trends by removing insignificant and misleading price changes. ZigZag connects the price's highest and lowest points using straight lines while ignoring minor swings. ZigZag just aims to make sense of the market's previous movements; it makes no attempt to predict the price of an item. It is only based on hindsight and is not predictive in any way. It is based on the past prices of securities and cannot forecast the next swing highs and swing lows. 🟢Advantages It eliminates market noise and displays the most significant price fluctuations. It operates in several timeframes. When utilized in cooperation with other technical indicators, it gives positive results. 🔴Disadvantages It will mark the latest high or low of the price with a time lag. The last stretch of the indicator (the one that involves the current price) may be redrawn. Not predictive in any way, has to be used in combination of other strategies to be effective. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work , Please like, comment and follow
Education
by QuantVue
Double Top Chart PatternThe Double Top or Bottom Chart Pattern is a reversal pattern as its name implies, the pattern is made up of two consecutive peaks or troughs that are roughly equal, with a moderate trough or peak in-between. This reversal could signal an end of an uptrend or downtrend. ( Double top with an end to an uptrend in this case). Double Top Chart Pattern A Double Top chart pattern is comprised of three main components: After a long bullish trend , the price reaches the highest point of the current uptrend After the highest point, there is a decline in price getting support from the support line After this trough the price again increases and reaches another peak falling to the same support line The long bullish trend is the prior trend which is reversed once the pattern is completed, with reaching the highest point of the current trend marking the 1st peak followed by a trough which gets support from the support line i.e. the neckline. Later the price further increases to reach the 2nd peak which gets resistance from the resistance line of 1st peak (usually). Once the price falls and breaks the neckline the formation is complete. The target price for the same is taken as the difference between the neckline and the 2nd peak, with the neckline acting as resistance after the pattern completion. Volume is a confirmatory indication that increases substantially as the breakout is observed and confirms the double top pattern completion! There are few limitations as well to the Double Top Pattern: Can be extremely harmful if identified incorrectly Sometimes the peaks or the trough could be just normal resistance than long-lasting change Might get converted to Triple top, so pay attention to the volume carefully Therefore, one must be extremely careful and patient before jumping to conclusions. Go Trading!!! Further, there are four different types of Double Top pattern based on their respective average rises and failure rate percentage, namely: Adam-Adam; Adam-Eve; Eve-Eve, and Eve-Adam. Where the average is the measure of the price movement from the breakout point to the prime point i.e. 1st peak or the Ultimate high. ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
COINBASE:BTCUSDEducation
by Mudrex
6
Inverse Head and Shoulder Pattern using BTCUSDThe head and shoulders chart pattern is a price reversal pattern that helps traders identify when a reversal may be underway after a trend is exhausted. It is of two types: Head & Shoulder and Inverse Head & Shoulder. This reversal could signal an end of an uptrend or downtrend. (Inverse Head & Shoulder with an end to downtrend in this case) Inverse Head & Shoulder: An inverse head & shoulder pattern is comprised of three main components: -After a long bearish trend, the price falls to a trough and subsequently rises to a peak -The price again falls to form a second trough substantially below the initial low and rises again to the same peak -The price falls for the third time but to the level of the first trough only before rising back to the same peak again In this chart pattern there are three trough in which a large trough (the head i.e. the second trough) has a slightly smaller trough on either side of it (right and left shoulder that are the first and third peak), with all of the trough increasing to a same level of resistance i.e. the peak until where all the troughs had risen, called as neckline in the pattern. Once the third trough (right shoulder) moves back to neckline it is likely to breakout to a bullish uptrend indicating a trend reversal hereby, which is the basic explanation of Head and Shoulder. Traders can use Inverse head and shoulder to buy when the breakout is observed i.e. at the neckline after the right shoulder reached there completing the Inverse Head & Shoulder formation. For confirmation traders can use the drop in volume as the Inverse Head & Shoulder is forming and a sudden increase in the volume as breakout is observed suggesting a shift from sellers before the pattern to buyers after the pattern. There are few limitations as well to the Head & Shoulder Pattern: -Sometimes false breakouts might be observed -The time duration for formation of the pattern might be too long -Trough or peak might be pretty far from the neckline resulting in large stop loss distances which might have o reviewed consistently -The price may see pullback after the third peak or trough often confusing few traders ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
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COINBASE:BTCUSDEducation
by Mudrex
12