1) Mistakes of beginners in lazy people in the market, the higher the earnings

in it.
trading.
Trading is a hard way to easy money. It is open
to everyone, but not everyone will pass it.... The
more a person is fixated on the end result rather
than on the action now, the less chances he has
to pass this way to the end. Such characters are
the majority, which means that the market will
still bring super profits until the last fool runs
out....

Mistake - 2
From the pixels of the thinking of individuals,
the image of the thinking of the crowd is created.
The knowledge and desire of the crowd is very
important for making money, because they have
to give you money. There is simply no other a Mistake - Low intelligence. This is more of a di-
priori. In order to gain somewhere, you need to agnosis.
lose somewhere.
Solution - Do not engage in trading or any work
that requires the use of intelligence
Mistake - 1
The solution is very simple and understandable,
but because of the low level of intelligence of this
type of personality cannot adequately assess their
capabilities. As a rule, such characters "stink" a lot
Mistake - The desire to get rich quickly without and prove their rightness in anything, even in what
working. they have no idea about. In real life, as a rule, they
are asocial personalities, they understand only the
Solution - Initially, you need to understand that language of brute force.
trading is a job Therefore, because of the lack of real punishment
in the conditionally anonymous Internet, they
There's no easy money here! Who works as well want to assert themselves and shine with their
as eats. If you came to trading hoping to make a "lack of brains". Unfortunately, or fortunately,
lot of money in a short time from pennies without there are a lot of such people coming to the mar-
doing anything and without knowing anything, ket, they are all doomed to zero their deposit, as
you are doomed to failure. You better then fit the well as to lower their already low real (not Inter-
casino, there you have a better chance to make net) self-esteem and develop a depressive state.
your dreams come true. Easy money want to get On the other hand, the more of these characters
the overwhelming number of people. that come to market, the more potential profit can
As a consequence - the majority of market partic- be made for people with intelligence starting at the
ipants due to illusory understanding of the market average level.
and the work itself lose all the funds to a penny.
That is why the cryptocurrency market is so high-
ly profitable. The greater the number of fools and Trading is more about knowledge of psychology
and intelligence. Many people, unfortunately,
 cannot initially achieve even average results. It I may have shown some pretty ridiculous exam-
would not be a shame for them to read these ples to motivate real lazy people, for whom moti-
lines. Do in life what is "yours". vation with words is nothing. Sometimes extreme
measures followed by real material punish-
ment/satisfaction are more effective. Most people
can only work well under the whip. And nothing
Mistake - 3 bad and shameful will be if in the role of execu-
tioner and at the same time a wizard for yourself
will be you.
But, this method of punishment / reward for moti-
vation works only if you are a "man of your
Mistake - Laziness to work. word", first of all in front of yourself. If you are a
life of blabber, then this kind of motivation to
Solution - Cultivate self-discipline and responsi- work you will not save you, as you will constantly
bility. Punishment/reward for not do- deceive yourself. And promise yourself that the
ing/completing the planned amount of work. next time will be different....

Simple examples of how to use the scheme of

punishment/reward for not doing/completing the Those people who expect a quick profit without
planned amount of work to motivate yourself. For effort and time - are doomed to give their modest
example, you planned to study some information deposit to the more intelligent and hardworking
about trading, but laziness won out. Therefore, ones.
that day you restrict yourself completely in eating.
The next day laziness wins again and you go on
hunger strike. Mistake - 4
In any case you will have to cover the planned
amount of knowledge, because you will not be
able to live without food. An example as an ex-
treme, but the extreme shows the very meaning
without water.
Also, if you are naturally lazy and you admit it, a Mistake - Not taking the job seriously.
good incentive for doing work that is not quite
interesting for you, but necessary will be a reward Solution - Knowledge + practice. To the repulsed
from yourself for doing the work. The reward - drained deposit.
should be adequate in comparison with the work
done. For example, you want to go to an expen- More knowledge and practice will give you a
sive restaurant, but according to your belief it is clearer picture of the market and sober up your
very expensive for you and it is not a rational attitude to it. More repulsed - only a drained de-
waste of money. posit or the loss of most of it will make you real-
But despite the prohibition the desire has not gone ize that there is no place for frivolity and frivolity
anywhere. It sits inside and is waiting to be satis- in this market. Non-seriousness to trading, as a
fied. You set yourself a goal. If you can earn rule, disappears when a person drains a significant
+20% to your trading deposit for 2 weeks, then amount of money. This action is often sobering
you have the right to irrationally spend all your for many people.
earnings and even more on a restaurant and realize
your dream. If you can't, then the trip to the res-
taurant is canceled until you achieve your goal. If you're like everyone else, you'll get the same
results as everyone else.
 Proper application of market knowledge can in-
Mistake - 5 flate your trading depot to an obscene size.

Mistake - 7

Mistake - Lack of basic knowledge of psychology

and sociology. Inability to analyze people's behav-
ior and distinguish deceit from truth. Mistake - Not wanting to learn the basics of trad-
ing yourself. Elementary laziness.
Solution - More practice in trading on the market,
as well as in studying the behavior of real people. Solution - First of all, study the base of trading
theory. If there is no desire to study it yourself,
Here only practice gives results. Psychology which is freely available on the Internet, then you
books cannot replace real study of people and should think about learning from real traders.
their behavior. Although psychology books can
serve as a good supplement, but not as a basis of Before you start trading with real money, you
knowledge for understanding people's future be- need to initially study well all the theory of trad-
havior in a given situation. For example, Gypsies ing. You can learn this on your own for free on the
are excellent psychologists, and at the same time internet, or you can take a paid training course.
they have not read any psychology books from People's reluctance to learn trading on their own
their lineage. Their practice and competition and their search for "teachers" who will present
among their kind since childhood for the sake of everything ready-made on a platter stimulates the
survival and easy profit served as the basis for multiplication of fraudulent teachers, so-called
their psychological skill of manipulating ordinary "info gypsies". As a rule, in reality, these charac-
gawkers ters are not practicing traders, but only sellers of
things that they themselves do not know how to
use. That is why they are forced to sell learning
Trading is the ultimate psychology, understand- theory, as in real market trading they cannot make
ing with the help of numbers and price charts money.
people's desires and future actions without con- Many people study at universities in various spe-
tacting the root cause that generates it all. cialties. But very few become real specialists in
demand. Trading is no exception. And the oppo-
site situation is also true, even after receiving from
Mistake - 6 an "info gypsy" simply systematized publicly
available material from the Internet, an average
person can succeed quite well in trading, as an el-
ementary amount of knowledge on trading will get
in one place and at once. Although with some ef-
Mistake - No basic understanding of the market fort and desire it could be obtained absolutely free
and trading. No knowledge of technical (TA) and of charge by spending some time and effort to
fundamental market analysis. search the Internet.
Think about it, can a lawyer in 5-6 classes get all
Solution - This problem is solved quite simply the knowledge for real independent work, which is
and logically. What is missing must be acquired, studied at the university for 5 years? The profes-
namely knowledge and experience in trading. sion of a trader is not more simple than the profes-
sion of a lawyer. Why does the bulk of the crowd
think otherwise? But on the other hand, the bulk
of the crowd loses money. Thanks to their igno- with a -25% loss, and a random signal with a fin-
rance to work we earn super profits. ger in the sky +10% will not be able to equalize
the loss. On the distance it will be a tragedy for
you.
Quality goods have a price tag. What is the price,
is the quality of the goods. Quality things cannot Blindly copying the trading methods of a suc-
cost pennies. Some things don't "sell" at all. cessful trader, which bring him big profits, to
you can only bring losses.

Mistake - 8 Mistake - 9

Mistake - Trading on various paid and free sig- Mistake - No practice at work. There is a lot of
nals of traders and imaginary traders (hamster- theoretical knowledge on trading, but there is no
signalers) without knowledge and independent experience in applying this knowledge in real
trading experience. trading.

Solution - The best solution until you have mas- Solution - Training depot 50-200$. Confirm the
tered the elementary knowledge of trading and theory with practice.
gained minimal practice of independent trading is
not to use any signals. You should also realize that Initially, when you have already mastered the the-
very often trading signals are sold not by traders, ory, you should start practicing. Most importantly,
but by the same hamsters, only more enterprising. you should start with a training depot of 50-200$
You should be careful with this. After all, a ham- no more, not depending on how much money you
ster is always a hamster, even veiled as a guru. have. Trading with a small amount of 50-200$ is
much better than trading on a demo account,
Without some knowledge and experience in mar- which in most cases is not available on exchanges.
ket situations, even the most accurate and profita- Only then, when your trades will be mostly cor-
ble hamster signals will be unprofitable. You can- rect, you can try trading with an acceptable
not buy intelligence, you have to create it yourself, amount of money to work with.
which, as a rule, the less intelligent forget about.
There is no "money" button. There are different
market situations that can break this button in a Do not be theorists, but practitioners. Only the
flash. Where an experienced trader can get out of weight of your deposit matters, not the learned
it, a beginner will be at a loss. book information
Very often signals are sold by traders - zombies of
TA books. Some traders who have been working
on Forex for many years under the cryptocurrency Mistake - 10
hype have readjusted to this market. As a rule, this
is a sadness. After all, every market has its own
peculiarities. The volatility and manipulative ac-
tions of cryptocurrencies are not comparable to
the Forex market. Mistake - No clear choice of trading plan and
It should be remembered that a loss on Stop-Loss strategy.
is the same loss no matter what it is called. If you
get hit 5 times by Stop-Loss -5%, you will end up
Solution - Test strategies and trading methods for Trading against the trend is like standing in the
yourself. path of a train and hoping it will ricochet away
from you.
Try out different trading methods and strategies
on a symbolic training amount of 50-200$. Mistake - 12
Thanks to successes and failures, choose the one
that suits you best. It is not terrible, if during the
strategy test, you will completely lose all your
training depot. After all, the amount is symbolic,
and your task is to gain experience and find a Mistake - Incorrect selection of entry and exit
more effective trading strategy for you. The time points from the position. Simulation of a monkey
spent on this does not matter, the result is im- working with a keyboard.
portant. Hurry slowly.
Solution - The correct entry point. Risk/profit ra-
tios should be at least 1:3. Setting adequate sell
There has to be a strategy and a plan. Without a target zones after buying. Using Stop Loss when
strategy and a plan, if you act on chance, you are necessary.
doomed.
The use of Stop Loss by beginners in trading will
teach them to choose the right entry point into the
Use in your trading an effective strategy that market. As the wrong entry point will always
brings profit on the distance. If you have not bring losses and knock out Stop Loss. This will
found such a strategy in the textbooks - create it help to prolong the life of the deposit if a person is
yourself. not a friend of the mind and is not able to learn
from others' or his mistakes.

The best trading strategy is the one that only you

use! The more people use the same strategies in The size of potential profits should initially ex-
their trading, the less effective they become over ceed the size of potential losses.
time.

Mistake - 13
Mistake - 11

Mistake - Being dependent on the opinion of the

Mistake - Not understanding where the price is majority. No clear position. Listening to public
and what phase of the market is now. No clear opinion and opinions of media FUD authorities of
choice and definition of the working trend (major, the crypto market. Cowardice in your own inde-
minor, minor (local) for work. pendent actions.

Solution - Study the base of trading - Dow Theo- Solution - Disconnect from chat rooms, channels,
ry. Learn to distinguish trends. Determine market youtube crypto bloggers, cryptocurrency world
phases. No one will do it for you news resources. There is no FUD information and
other people's opinions! Kill such things as: de-
pendence of actions on public opinion, greed, feel-
ing of lost profit, lack of confidence in your ac-
tions. Mistake - Not tracking the price after entering a
If your goal is to trade profitably, do not listen to position
public opinion and opinions of media FUD crypto
market authorities. Do not use any paid or free Solution - The solution is simple, take trading
trading signals, especially those from telegram more seriously. Have a clear plan of work. If there
channels. is no possibility to control the deal - use Stop-
Do not enter a position on the news or when "eve- Loss.
rything" is "all out". A good solution would be to
completely disconnect during trading from tele- You can buy some "technological leap of faith"
gram channels, chat rooms, youtube crypto blog- and after a while the project will close, the active
gers. Use them only as an indicator of public opin- will not just depreciate, it will simply disappear,
ion of stupidity. Your advisors and trading assis- and you will be left with only the program code of
tants are the chart, the glass, your buy/sell history unfulfilled hope.
and your level of intelligence. It is necessary to control, but at the same time you
should not jump from one extreme to another and
constantly stare at charts, everything has its meas-
Mechanically memorizing variant moves without ure. It is worth noting that when entering a posi-
really understanding what causes them will tion you should have a clear plan of work and po-
make you poor and easily manipulated. tential price movements and risks. If you do not
have this, it is better to forget about trading.

Mistake - 14 There must be a strategy and a plan. At the same

time, your strategy and plan should be malleable
from market situations.

Mistake - Buying crypto coins when "important Mistake - 16

news" is released when the price rises.

Solution - Disconnect from chat rooms, channels,

youtube crypto bloggers, cryptocurrency world
news resources. There is no FUD information and Mistake - Ignoring risk in trading. Not using Stop
other people's opinions! Loss when necessary.

People are afraid to buy cheap, they buy high Solution - Correct entry point. Risk/profit ratios
priced. The more high the price - the more should be at least 1:3. Use of Stop Loss when
people buy willingly, a high price gives the necessary.
illusion of safety and value to the purchase. The
crowd, in general, buys and sells at the wrong
time, don't follow the always unprofitable crowd! Strive to increase your profits, but don't forget to
cut your losses! Reduced losses will increase
Mistake - 15 your profits twice as much!
 Mistake - 17 People who come to the market to get rich quick
get poor quickly

Mistake - 19

Mistake - Greed. Not selling most of the position

in an uptrend or on a short-term pump, hoping to
make even more money.
Mistake - Working without elementary
Solution - No to greed! Greed breeds poverty, knowledge of trading in margin trading. Working
depression, and a stressed-out hamster. with a large part of the depot without appropriate
security. Not using Stop Loss in margin trading.
Don't expect super profits, you will earn more by Margin Call.
taking +10-30% profits than waiting for pumps of
hundreds of percent. As a rule, they do not wait Solution - If you are a beginner trader you are not
for them. Remember that 99.9% are created only allowed to use margin trading!
to collect real money from fools under the hype of
blockchain technology. Some "projects" live until More than 80% of the crowd do not know how to
the first pump, some of them live for 1-2-3 years, trade and lose on the spot market, where it seems
but the end result is complete death and oblivion physically impossible to do it. Giving such fools
of the new technology "that will save the world". and also super greedy - the opportunity to trade on
margin and a wide choice of leverage - will nullify
the deposit in the near future.
Be less greedy for others, as a consequence you Many exchanges where there is margin trading,
will be much richer for others. Greed begets for example Binance, have a lot of tricks that do
poverty. not give a hamster a chance to survive at all. Most
exchanges hunt for large deposits in margin
trading, but recently many exchanges are not
Mistake - 18 squeamish with penny "hamster" deposits.

Remember once and for all - margin trading is

not for beginners! The problem is not so much in
Mistake - Work in Va-Bank all depo in the hope knowledge and experience as in psychology and
of quick big profits. desires! Telling a hamster how to work on
margin will mean giving him a grenade with the
Solution - Study the knowledge base on money ring pulled out.
management. Select an acceptable method of
money management for yourself.

In your trading strategy, no matter how effective it

was, do not work with a large part of the deposit
ever! Remember not only about the potential
profit, but also about the risks!
 Mistake – 20 to its previous values. Do not catch "falling
knives", sometimes they hurt the hand that catches
them. If an asset loses value tens or even hundreds
of times, it means that it was a purely speculative
instrument to which traders and deceived investors
Mistake - Wish to earn a big money from pennies lost interest.
very quickly. Use in margin trading inadequate
leverage X10-100. Margin Call.
The less you believe in the reality of crypto pro-
Solution - If you are a beginner trader you are not ject legends, the higher your real earnings in the
allowed to use margin trading! market. After all, your thinking is free from the
illusions of liars.
If a hamster in margin trading is given several
leverage options to choose from, he will of course
choose the largest one! 10x 50x 100x! After all, Mistake - 22
you need a lot of money in a short period of time!
Of course he will not put Stop-Loss, because the
past few times when he put it was knocked out
before the price movement. It is worth noting that
such characters work with the entire available Mistake - Joining a sect of believers in one of
amount of their deposit, otherwise there is no way, thousands of skams. Faith in the air. Entering var-
you need urgently a lot of money in a moment! Of ious "promising" ICOs. The "hold of a promising
course - margin call at the slightest movement scam".
against him.
Solution - Don't enter various ICOs - money col-
lection for fools if you don't have enough infor-
Less risk - less profit! More risk - more profit! mation about the project and the people who make
Excessive risk - zero deposit! it.

Don't keep perspective shit on your wallets that

Mistake - 21 the stupid crowd believes in! Keep real money and
cryptocurrencies behind the states! In 99.9% of
cases from 2017 to 2019, most of the top 100
"promising projects" for which an ICO was origi-
nally held have depreciated 10 - 100 times or
Mistake - Buying "at the bottom" cheaply and re- more! Many disappeared altogether!
buying at the next "bottom" at even sweeter pric-
es, without really understanding what is happen- If you are like everyone else, then the result will
ing with the actives in question. be like everyone else, or rather nothing.

Solution - no dead coins! Do not buy crypto coins Mistake - 23

because "they are cheap". Buy only when you
confirm an uptrend reversal.

Don't enter a large amount into dead very cheap

coins in hopes of super profits. Do not freeze your Mistake - giving money to trust money manage-
money for eternity! If a coin has lost a large % of ment (TM) of "internet gurus" of trading.
its value, it does not guarantee the price will return
Solution - Don't give it to anyone in trust. Work
yourself with your own money, or leave trading.

On the anonymous internet, only two options are

taken into trust management (TM):
1) open scammers, after transferring the money
will vaporize along with the $, changing the
legend's identity.
2) imaginary traders, who only drain money, and
survive in the market (pay % to investors), only
thanks to new infusion of money (returns in the
TM), or by pure chance when the trend turns, and
they present it as their skill. In all other cases, they
are unprofitable on the distance, and as a conse-
quence you lose money.

Give a fool any amount of money no matter how

large or small, he will quickly zero it out with his
desire for more.
 - Frequent exit from the market on the contrary
Mistakes of mid-level with a very short Stop Loss. Not taking into ac-
count the volatility of the trading instrument.
traders
- Copying publicly available strategies and trading
methods from TA books and trading courses.
No one knows the exact future, not even the one
who creates it. There are only more probable - Copying effective strategies and trading methods
outcomes of events, which may or may not mate- in traders who really earn on these strategies, but
rialize into reality. One always works from the it is not a fact that in your work these methods or
situation and against the expectations of the strategies will suit you.
crowd
- Working on only one strategy and those methods
Think about it, how can someone who is always that over time have become less effective.
trying to adjust to the market and has no influ-
ence on it himself know the exact future? How - There is no plasticity of trading strategy.
can a slave know what the master does not Straight-line thinking.
know? How can a mouse know when the cat will
decide to eat it? Today, tomorrow or never? - No ability to work two ways when the price goes
against you. No plan "B."
The more stupid a person is, the more he is sure
of his rightness and tries to spread the word so - Emphasis on working for profits, but no consid-
that he will be noticed. He is completely control- eration of potential losses. Many minus trades in a
lable, his thinking and as a consequence his be- row. A desire to "get even".
havior is completely subordinated. His thoughts
are not his thoughts, but the effect of mass pro- - Entering trading instruments with an inherently
gramming. poor risk/profit ratio.

- Market phases and trends, both local and global,

are not taken into account.

- Trading against the trend. Patience of losses

when the price goes against you.

- Working on instruments that everyone works - Not exiting a position after a support breakout.
with and like everyone else.
- Trading on margin with high leverage.
- Trading with the help of various publicly availa-
ble indicators for the crowd. - Cheating the developers of a certain coin: "print-
ing" new coins, different coin unlocks, Swap (re-
- Trading clearly according to the rules prescribed placement) coins.
in TA books, without understanding the actions
that give rise to these rules and movements. - Delists of coins with a bad legend. As a conse-
quence of drops in value or complete inability to
- Bad entry points. Using a long Stop Loss at a sell the coin.
bad entry point initially. Big losses when the price
goes against you. - Working a large part of the depo on high-risk
trading instruments. Which as and pampasya on a
large percentage, and merge on the corresponding
percentage. Your way of thinking affects your habits, and
your habits are basically what makes money or
- Entering a large part of the trading depot in frank loses money in the market.
satoshnyh scams without a strong legend of the
creators in the hope of a short-term pump.
Methods for SOLVING mistakes of
- Entering coins that are only traded on obscure
exchanges.
intermediate level traders.

- Entry of a large part of the trading deposit in

coins that many times pampy.

- Entry or accumulation of a large position of il-

liquid coin. Not being able to exit a large part of
the same position when important support levels
are broken. - Navigate the global cycles of financial mar-
kets other than cryptocurrency. At this point in
- Entry into dead satosh coins at the minimum time, cryptocurrency follows the echo of other
price without the ability to exit the position. For larger markets, not the other way around.
example, buying at 1 satosh. It is not possible to
sell on the market, as you need someone to buy - Don't operate against the trend! Be trend-
from you at the same minimum price. Freezing oriented. You can work on rebounds, against the
money. trend, but do not get carried away with it. Or limit
monetary risks in this kind of work.
- Entering a large part of the deposit in a position Decide in which trend in your trading strategy you
at a certain price "cheap" at the "bottom". Money intend to work. Major, minor or minor (minor).
freeze. This is very important. Otherwise, without realiz-
ing it, you will work against the trend.
- Entering a large part of the profit after a pump to
re-buy. - Learn to be "out of the market" when there is
no good entry point or there are doubts about the
- Failure to hold a position in the trend. Premature further development of the trend. Whoever earns,
exit from the market. Being "fearful" in trades. has patience and a plan of action.

- Nervousness. Very frequent jittery trades. Fa- - Disconnect from the news FUD if you notice
tigue from trading. that your opinion is not radically different from
the majority. The majority always loses. Under-
- No "money safety bag". standing "crypto news for fools" is effective only
when you can read "between the lines", if it is not
- No ability to be "out of the market". observed and you take everything literally, it is
worth not to be interested in "news" at all. Work
only with the chart and the bar.
A trader's behavior in the market is the result of As the great Dow said, the chart and the price
his thinking. Those who understand the thinking takes into account everything, and he is right. Ac-
of the majority will be able to turn it against cording to the chart you can understand where the
them. It's not magic. This is the level of intelli- next positive or negative tales will be and how
gence. strong the impact will be.
 jects, the more potential you have to make money
- You can sometimes listen to other people's on the market.
opinions, but always make the final decision
yourself. Your authority in trade is you! - Do not enter one position with a large amount
of capital. No matter how tempting it may seem.
- Use your working strategy in trading. Always Any trader strives to "squeeze" maximum profit
have a plan of action for different outcomes of out of his deposit. Therefore, it is absolutely logi-
situations, including less probable ones. Do not cal that the majority of traders open positions for a
work without a strategy, plan and understanding. full deposit. As practice shows, this approach has
a minus rather than a plus.
- Orient yourself where accumulation and dis- Surely you have had situations when the market
tribution were on the instruments. It is very gives you a great chance to enter, but you are al-
foolish to accumulate a position in the distribution ready sitting in a position and cannot afford to buy
on XXL and expect a significant price growth, more? To solve this problem it is enough to enter
believing the news noise (background for resetting the market gradually. For example, open a posi-
the position by large market participants to fools). tion for the amount of 5-10% of your deposit. In
this way, you will have many more chances to buy
- Buy when everyone is scared (start a partial more money.
set). Sell when everyone is "7th heaven" from
profits. Do not be greedy. At least think about par- - The ratio of potential profit to loss is at least 3
tial fixing of especially profitable positions or pro- to 1 or more. The classic approach to strategy de-
tecting profits with stop-loss. velopment is that the trader knows in advance
where the stop loss will be and where take profit
- Protect your profits when trading in a rising will be. Therefore, he knows the ratio of potential
trend or during a pump, don't get greedy! This is profit to loss.
achieved through a trivial stop-loss or partial fixa- For example, the potential profit is 100% and the
tion before resistance. It is better to use two meth- loss is 20%. In this case, the ratio is 5:1. This is a
ods at the same time and not be greedy. Do not let good indicator. If there is a signal, it is worth en-
your local profit turn into a loss. tering such a trade.
The main idea of this rule is to open trades that
- Always monitor your open trades. There are a can bring potential profit more than loss. In this
lot of tools and applications for different tastes for case, the optimal ratio should be somewhere from
such monitoring. Things don't always go accord- 3 to 1 and more.
ing to plan A. But at the same time, don't let prof-
its grow. - Limit the risk per trade. The maximum loss in
trading textbooks takes 2% of the deposit. That is,
- Do not open many positions on trading in- in one trade (or group of trades) you should not
struments at the same time. Otherwise, your at- lose more than 2% of the deposit. Of course, noth-
tention will be scattered, hence a high probability ing prevents you from choosing another value of
of not keeping track. Do not collect "wrappers of 1%, 3%, 5% for your trading. The main idea is to
faith" for fools (adult children). There should be a limit the loss based on the purchase amount. If
maximum of 5-6 large positions. you trade with leverage, then accordingly stop-
loss will be shorter.
- Always be cool-headed in trading and analyz- This rule allows you to comfortably experience
ing. Do not "fall in love" with a trading instru- losses and look at the market sensibly. The risk of
ment. Do not collect "wrappers of faith for true losing 50 times in a row (2% each) is so small that
fools". Have iron nerves and strict self-discipline. it is difficult to express it in numbers. Therefore,
The less you believe in the reality of crypto pro-
those traders who adhere to this rule never lose all Forex) or real not virtual business. Do not put
their money. your eggs in one bowl!

- Stop Loss allows you to limit losses. If your - Diversification of trading. Do not keep all your
strategy allows you to use protective orders in capital on one exchange, no matter how reliable
your trading - Stop Loss. At the same time do not you think it is. Use a combination of 3-4 highly
forget that the stop loss level should not exceed liquid exchanges for trading and making money
5% of your working position. and 1-2 low liquid exchanges for directing the
price of a certain trading instrument.
- Use leverage only when necessary, or better
yet, do not use it at all. The problem is that by - Always cash out some of your profits into real
opening a position with leverage you are not money (goods and services), this is probably the
guessing the options of market movements, but most important rule that everyone forgets, and
have already signed up to play casino with the when they remember it's too late.
stock exchange. After all, the exchange is interest-
ed in you losing money.
No matter how much virtual money you earn on
- Don't stop profits from growing. There is a the stock exchange, not cashed in real goods and
very simple rule: "do not prevent profits from services - is equal to zero!
growing". Beginner traders seeing profit always
try to fix it as soon as possible. As a result, it turns
out that they exit earlier than necessary and earn
pennies. This approach is wrong. You need to
overcome yourself and let the profit grow. You
should not look for exit points on a growing trad-
ing instrument.

- If you have made many losing trades in a row,

it means that you are tired, and you just need to
take a break from the market for a while. The
market will not run away, but the money may run
away on a hot head.

- Similarly, if you have made a lot of plus trades

- make sure you take a break from trading for a
while. Control your faith in yourself, overconfi-
dence and boldness in actions can hit your wallet
excessively.

- Don't fix all your capital in one stablecoin,

sooner or later it will end badly. In addition to sta-
blecoins, keep part of your funds in bitcoin and
fiat currencies. Stablecoins are altcoins, sooner or
later there will be a "purge" to zero. Don't mess
around with it.

- Diversification of instruments. Invest your

profits in other types of trading (stocks, metals,
 Mistakes of high-level traders.
One of the main reasons why
high-level traders lose money.
1) 20-30% IR (inviolable reserve). In each allo-
cated amount for a certain coin to have at least
Knowledge of technical analysis and psychology 20% IR reserve of money (stablecoins, USD) in
of crowd behavior will make you a God in trad- case of unforeseen circumstances (e.g. squeezes,
ing. If you want to learn something in our world, or a significant market correction during force
play with a stronger player. Go where it is scary, majeure).
only there you will gain strength, you will be able
to stand up to your full height and spread your
wings like an Atlantean. Regardless of the size of your deposit, approach
the market as a major market participant. Stop
thinking like a "hamster". You don't need to
If you are defeated, go learn and train. If you are guess, you need to know and know how to know,
victorious - look for an opponent who can poten- and be ready for any outcome of even unlikely
tially defeat you. Development gives you a scenarios.
chance to free yourself from everything.

2) Diversification of trading place risks. I, un-

fortunately, have negative experience in this. The
sums are significant, six-figure sums.
Do not keep all your capital on one exchange, no
matter how reliable you think it is. If you are a
trader with experience, you are sure to correctly
use all the security measures of working on the
Internet, but you are not protected from hacking
- No sufficient amount of "inviolable reserve" of exchanges and partial theft of money or the com-
real fiat money for life and for various unforeseen plete departure of the exchange with money in the
life situations. next world, as well as from the banal "squeezing
of money" by employees of exchanges.
When you earn substantial amounts of money, you
automatically become under the "human control"
- Stop Loss does not work due to "technical rea- of the exchange. Exchanges are happy when peo-
sons" of the exchange when working on margin ple lose money, but saddened when someone
with leverage. earns past their trough.
Do not deposit large sums of money into the ex-
change at once, especially if you trade there infre-
quently. Deposit in installments and also withdraw
- Trading all depo on one or two exchanges. profit or coins. Do not make your withdrawal re-
quire manual confirmation by the exchange opera-
tor. Before making large withdrawals, be sure to
make many small and medium-sized deposits on
- Hacker attacks on exchanges, account hacking. the exchange.
If your position is large, allocate it to several large
liquid exchanges (3-4 exchanges) so as not to
attract attention. After all, you should always trade 5) Limit risky trades to a fixed working
in order to constantly earn money. amount. For risky short-term trades use the allo-
cated amount of less than 10% of the trading depo
fixed amount.
Exchanges are reluctant to give large amounts of If there are a lot of losing trades, the money is not
profit, because you bring them in the real basket "refilled", all losses are covered by working with
little, and want to take the real, conditionally not the remaining amount. If there are many profitable
virtual (cryptocurrency, USD) a lot to then trades and the sum becomes more than the fixed
convert into real products and services. planned amount - the rest is cashed out or trans-
ferred to a less risky strategy

3) Keep part of your accumulated position (30-

40%) on cold or hardware crypto wallets. Strive to increase your profits, but don't forget to
Put it on the exchange in installments to sell on cut your losses! Reduced losses will increase
the market when you realize that it's time to lock your profits twice as much!
in profits. Take into account liquidity and
problems/no problems with withdrawal in the info
space on this exchange. Do not take unnecessary 6) Use less risky trading strategies and tech-
risks. niques. Work on highly liquid less risky assets
After fixing the profit on cryptocurrency, with less risky strategies and methods. Position
immediately withdraw steiblecoins or fiat from trading, pyramiding, working in channels, partial
the exchange. Then the next large portion, it is or full price management.
possible on another liquid exchange, so as not to
attract attention.
The rule is to deposit - sell on the market and There is a rule, the larger your deposit becomes,
immediately withdraw, and only then the next the less you earn per month in percentage terms,
tranche. Similarly with the purchase of but significantly more in real money.
cryptocurrency for a substantial amount.

4) How to avoid unfair play of the exchange in 7) IR Money (USDT, BTC, ETH) when manag-
trading on margin with leverage. On margin ing the price. When working in channels on as-
with leverage to work not from 1 account, but sets, have a percentage in "money" from 20 to
from 3-4 with cloned trades, so that the exchange 40% depending on the direction of movement.
"did not see" a large amount on 1 account (split
the position).
Also use several Stop Losses in a certain price A trader's behavior in the market is the result of
zone Split Stop Loss, for better triggering if there his thinking. Those who understand the thinking
is a panic selloff and there is not enough liquidity of the majority will be able to turn it against
in the instrument and a large price gap. them. It's not magic. This is the level of intelli-
gence

Don't play casino games according to casino

rules. You can't win in a casino. If you win, it is Your way of thinking affects your habits, and
only to intrigue you and in the future you will be your habits are basically what makes money or
screwed by your own greed and recklessness. loses money.
8) A large reserve of fiat money for life. Create
a sufficient reserve of "Untouchable Fiat Money
Reserve" for the total trading depot. This is very
important so that you don't have to "pull your
money out" during a significant prolonged market
correction. As a rule, it is at least 20-30% of your
deposit.

Diversification is a guarantee of calmness and

passing through market storms without signifi-
cant (acceptable in % ratio to the total deposit)
damage.

9) Don't forget that "big brother" is always

"watching" you and sooner or later everything
belongs to "confiscation" if you end up having too
much of anything
Materialize your profits not only in real goods and
services to you, but also to trustworthy people
with whom you cannot be linked either by family
connections or "contacts".

10) Accumulate 10-20% (not faith scams) of

your total "pure cryptocurrency" depot unbound
from any identity attachment, regardless of market
pumps/dumps. Take it seriously.
If you are verified on an exchange and withdraw
cryptocurrency to your wallet - it is "dirty" be-
cause it is easily identified with your identity.
How to "unlink" cryptocurrency from your identi-
ty think for yourself, it's not necessarily mixers
(it's a trap that will slam in time).
 1) Money management by pyramiding The main thing is to correctly identify the trend
method. and "sit" on it. The most difficult moment is to
identify the beginning of the trend.

On a bullish trend, it is always best to work on

the bullish side; on a bearish trend, work on
the bearish side. Always work on the trend!

However, as much as pyramiding can be profita-

ble, it can also be dangerous if used incorrectly.
The main thing is to identify the trend correctly.

One well-defined trend lasting only 1-2 weeks can

double or triple your deposit with the right ap-
One of the main features of this method is min-
proach. At the same time, the risk is only about -
imal risks with high rates of profit.
5%. On cryptocurrency with low liquidity 5-8%
The pyramiding (scaling) method of money man- due to volatility. Stops less than 5% will be con-
agement is very popular among traders with expe- stantly knocked out. It makes no sense to put such
rience. The essence of this method is to sequen- short stops. It is very important to choose the li-
tially open several trades on a trend. We increase quidity of the instrument. Only on liquid trading
the position as the profit grows, not as the loss instruments the method works properly.
grows.
Very important. Do not confuse averaging and
The pyramiding method of money management is pyramiding, as these two methods are totally dif-
perfectly combined with the positional trading ferent. Averaging occurs when the price goes
strategy. This method also increases the deposit against your position. And pyramiding is the op-
well when a trader trades in upward (long) and posite, when the price goes in your side.
downward channels (short).
Pyramiding allows you to get a super efficient
Pyramiding trading is a strategy that involves add- profit/risk ratio by moving your stop loss as the
ing a new position to an existing profitable posi- trend moves in your side.
tion. In other words, it is buying or selling to add
2) How to make increasing profits with
to an existing position after the market has devel-
oped a move in a profitable direction. minimal risk.

You increase your position. In this case the size of

each next trade can be changed taking into ac-
count the result of the previous one, i.e. the posi-
tion is increased when you get profit in the last
trade to increase your deposit at a faster pace or
after you get a loss to accelerate the exit from
drawdown.

This is the main advantage of applying pyramid-

ing to trading. If you have done everything cor-
rectly, you do not expose your trading capital to
additional risk. In fact, you reduce your risk as the
market moves in a profitable direction (protect
your profit with a stop-loss) in a developing trend. The picture shows an uptrend characterized by
rising highs and lows. Such market conditions are
ideal for traders to increase their profitable posi- support level. At the moment of opening a deal
tions. In this picture, the price breaks resistance you must set a stop loss with a risk of -5% of your
levels time after time and then tests them as sup- trading capital invested in this coin.
port levels.
You want to trade further as the market is still in a
In the example we are looking at, we will show strong uptrend and your first trade has already ac-
working in long position. It is possible to work cumulated some profit. As the trend progresses,
both on margin and in spot. The first purchase was the price breaks the next resistance level and tests
made when the market tested the level of former it as a new support. You see that the price has
resistance, which after the breakdown became a consolidated above this support level and so you
support level. The second and third purchases decide to buy another $5,000 worth of cryptocur-
were made similarly, when the market tested a rency and move the stop loss of the first trade to
new support level ( previous resistance). the stop loss of the second trade.

Remember that the basis for adding a new position The price breaks a key resistance level for the
to the one you already have will be when the price third time, which again becomes support on the
breaks through the next resistance level, and then, way to further growth. Observing the unrelenting
when returning to it, the price should show signs strength of the uptrend, you buy $5,000 worth of
of consolidation above this level. cryptocurrency again and move the stop losses of
trade 1 and 2 to the stop loss location of trade 3.
That is why the presence of a stable trend is a nec-
essary condition for effective pyramiding. Now A lot of purchases are "expensive", aren't they? At
that you understand the basic principles of pyra- the stage of the third purchase, you have cumula-
miding, let's delve into its mechanics. tively accumulated a relatively large position of
$15,000. However, has your risk increased? In
The key to successful pyramiding is always keep- fact, it is completely absent. As you are already in
ing a proper risk/return ratio. This means that your profit. At the time of your third purchase, you
risk should not exceed half of the potential profit. were already at +80% profit and -5% risk.
Better yet, 1:3 or higher. Therefore, if your profit
target is +15%, your stop loss should not exceed - Then what will be the potential profit if after mak-
5%. In this way, a risk/reward ratio of 1:3 is ing 3 trades the market goes another +40% in the
achieved. As the trend progresses, the risk/profit same profitable direction? It will be a huge profit,
ratio will increase in your side, the main thing is amounting to +200% of the trading capital. Let's
not to forget to move the stop loss. analyze the numbers to find out.

Let's suppose that having a trading capital allocat- 3) The mechanics of pyramiding in
ed to this instrument in the amount of 20000$, on numbers.
the retest of each key level you plan to buy in the
amount of 5000$.

The size of planned profit from each deal, in the

process of development of upward movement,
will be different, while the size of stop loss for
each new deal will not exceed -5%

Let's look at this example, starting with a $5,000

purchase of cryptocurrency. There is a strong up-
trend, it is confirmed by the older timeframes.
Now that you have a good understanding of the
The price breaks through the resistance level,
dynamics behind pyramiding, let's dig deeper into
which at the next testing of its price becomes the
the numbers to find out why pyramiding is a prof- As you can see from the above calculations, in
itable strategy. case of realization of the worst scenario at any
time the loss on a newly opened deal will not ex-
The picture below shows the same example of a ceed -5%, while in case of realization of the best
strong uptrend that you saw earlier, only this time scenario the profit on all three deals will be
it includes the profit potential along with the risk +200%. This makes the use of pyramiding in trad-
profile of each of your three trades. ing not only very profitable, but also much more
This is where the real magic begins. Notice how psychologically comfortable for the trader.
the profit potential from each trade you make in-
creases while the risk decreases. The first trade
alone brought you from buy to hold +100% profit,
which in itself can be considered a serious result
in trading.

Let's look at both the best and worst case scenari-

os for each pyramiding stage in this movement.

First purchase:
Entering a trade for $5,000 worth of cryptocurren-
cy X.

Best case scenario: +100% profit.

This is a unique method of money management.
Worst case scenario: -5% loss. Pyramiding in trading can be an incredibly profit-
able method of accumulating a profitable position.
Second purchase: The scheme of the algorithm of actions I have de-
scribed and shown in the figure above. If you
Entering a trade worth $5,000 of cryptocurrency
work correctly, this method allows you to increase
X.
your deposit by a significant percentage, risking a
Best case scenario: +160% profit. minimal amount, and if the trend develops, you
will not risk anything at all. The most important
Worst case scenario: +35% (+40% profit from the thing is to "sit on the trend" and work correctly.
first trade and -5% loss from the second trade).
4) How to make a position set on the
Third purchase:
trend. When to enter?
Entering a trade worth $5,000 of cryptocurrency
X.

Best case scenario: +200% profit.

Worst case scenario: +75% (+80% profit from the

first trade and -5% loss from the second trade).

Best case scenario: +200% profit (+100%

profit from the first deal, +60% profit from the
second deal and +40% profit from the third deal)
Another important question in pyramiding is: There is also an alternative variant. When a
when to actually enter a deal, to gain a position general stop-loss is used. It gives less opportunity
yet? The answer to this question can be divided for price movement and can be hit by a "shadow"
into several approaches. Each of them has its pros (false takeout).
and cons and will give different results in different
situations. Just who is comfortable with what and I, for example, use a 2 stop loss. No matter how
who is more accustomed to what in his trading. many entries I had on pullbacks as the trend
grows. The first one is the upper one, it is about
Entering a deal when building a "pyramid": 30% of the whole position. As a rule, it is equal to
the stop-loss level of the last entry (buy on the
1) On pullbacks. trend). The second is 70% of the position, it is
2) On signs of continued movement. For exam- when the trend breaks. Both stop losses are pulled
ple, it can be a powerful volume entry or a ham- up as the trend grows.
mer candlestick pattern. It is logical to use stop losses outside some
3) When important levels are broken important levels. A trader in general should decide
on the total risk he is willing to bear. For example,
it is -5%. It means that the next positions should
be calculated in such a way as to compensate for
5) Using stop loss in pyramiding the loss of the next ones, taking into account the
trading. profit of the previous steps and to meet the -5%.

It is necessary to understand that with the correct

definition of the trend, and the correct scaling of
the pyramid, the loss of -5% is purely conditional,
as until the stop is taken out, you can already
double or triple the total profit. The main thing
with price growth do not forget to pull up the
stop-loss. And put it in such a way that they are
not knocked out before time. I, as a rule, exit
when stop-losses are hit, it is two, as the first one
can be knocked out, and the price can continue to
grow.
Of course, stop-loss is used in pyramiding. It is
6) Profit Fixation.
recommended to use a separate stop for each entry
(buying a position) (solving the liquidity problem
during stock exchange manipulations). As the
trend progresses, it should be pulled upwards.

How to fix profits in pyramiding money

management? There are several different
techniques for closing positions:

1) According to the planned profit. For

example, you planned to take +100% profit from
this tool. You have reached your take profit. You
left the position, took profit and forgot about this 3) Determine the targets at which you will fix
tool. profits before you even enter your first trade.

2) When profit growth slows down. For 4) Always maintain a proper risk/reward ratio.
example, you have already doubled your profit on
this trend and this is enough for you. The trend 5) Always wait for trend movements. Not all
has gone sideways, the profit is not growing, or is entries will be successful, but you can improve
growing slowly. It is more reasonable for you to your performance by being more selective.
close this profitable deal and transfer the profit to Experience will help you to identify the
the trend that is emerging, thus building a new beginnings of strong trends more accurately.
"pyramid" on a faster growing trend. 6) Pyramiding tactics work best in the stock
3) At the first signs of a trend reversal. Not markets due to the fact that stocks are more
breaking important resistance levels, reversal impulsive to long-term growth. With
cryptocurrencies this method works well on
patterns, breaking the trend line.
highly liquid top coins such as: BTC, LTC,
4) On pulling stop losses. A stop loss has been ETH. On pamp coins this method does not
taken out. Depending on what methodology of work.
placing stop losses you use either one or fractional
for each entry separately. Knocked out the stop, 7) Always put stop losses if you can not control
took profit and forgot about this trading tool. You the position online. Because trading is carried out
start searching for a new tool with a good entry with increased risks.
point at the stage of trend initiation. 8) Do not be greedy with profits. Stick to your
In my opinion, a reasonable solution is a partial trading plan no matter what. Be less greedy for
fixation of profit at some maximum marks at the others, as a consequence you will be richer for
growth of the trend. I also trade aggressively others. Usually strong trend movements go on for
increasing the asset with a part of the position several weeks. There are exceptions. For example,
about 30%. An important point is that at local LTC trended for half a year before halving, but
maximums I sell these 30% almost completely. As this is an exception rather than a rule
the trend advances, I constantly pull up the lower 9) Move the stop loss of the previous position to
stop loss (main position). I exit 70% of the the stop loss level of each new position to control
position when the trend turns completely (i.e. the total risk. This approach is called a trailing
when the stop is knocked out). stop.
7) Tips for working on the pyramiding 10) Trend movements are best when strong
system. support and resistance levels are broken.

11) Try not to overcomplicate pyramiding and use

the same trade size when opening new buys or
sells

1) Apply pyramiding in a stable, trending

market.

2) Always identify support and resistance levels

before you enter the market. Plan your trades
and make a trading plan.
 this figure.

There are four kinds of triangles:

1) Ascending triangle.

2) Descending triangle.

3) Symmetrical triangle.

4) Expanding triangle.

CONTENTS:

1) Triangle figure. Types of triangles.

2) Rules for all triangle figures.

3) Targets setting while working with the figure.

4) Formation of the figure and volume changes.

5) Example of "Ascending triangle".

6) Example "Descending triangle". The ascending and descending triangle, no matter at

what stage of the trend they are formed, these
7) Example "Symmetrical triangle". patterns are quite clear predictors of the market
situation.
8) Example "Expanding triangle".
An ascending triangle is considered to be a bullish
pattern.

Triangle figure. Types of A descending triangle is considered to be a bearish

triangles. pattern.

Triangle is one of the most common figures of Symmetrical triangle is a neutral pattern. A
technical analysis. symmetrical triangle says that the strength of
"bulls" and "bears" are equalised, and the trend is
There are narrowing and expanding triangles. most likely to continue.
Narrowing triangles are much more common on
charts. Expanding triangles are more rare on charts. An expanding (diverging) triangle is, like a
The reason is the action that causes the formation of symmetrical (isosceles) triangle, an uncertainty
triangle.

Example of triangles on a chart in clockwise

sequence:

1) "Symmetrical triangle" (isosceles).

2) "Ascending triangle" (bullish).

3) "Descending triangle" (bearish).

4) "Expanding triangle" (divergent).

The triangle reminds of a fight between two tired

fighters. An early breakout shows that one of the
fighters is stronger for the other. Sometimes you
can understand from a fake breakout which way the Rules for all triangle figures.
pattern is likely will work out. If prices stay inside
the triangle until the end (no fake breakouts), it 1) The price breakout is more likely to occur in the
means that both fighters are tired and it is unlikely direction of the previous trend.
that a new trend will be formed. The breakout will
be according to the current trend. 2) Within a triangle, there is usually an odd number
Many factors can affect the probability of price of swings (waves). It is desirable to have at least
breaking a particular level: type of previous trend five waves (three down and two up or the opposite).
The more waves, the stronger the signal.
(bullish/bearish), support/resistance lines, closeness
of important support/resistance levels, significant 3) If the last wave of the triangle did not touch the
events and news on the stock... border and turned out earlier, it is assumed that it
will lead to a sharp price movement when one of the
sides will be broken.

4) It is not recommended to trade inside a triangle

pattern. Targets setting while working
5) During the price movement inside the triangle, with the figure.
volume indicators should decrease, but during the
breakout of one of the sides they should increase. If
the price after the boundary breakout tries to return
back, then to be successful for the pattern, this
return should occur on decreasing volume.

6) If after the breakout of one of the sides of the

triangle the price "tries" to return back, it should
happen with decreasing volume indicators
(otherwise it signals about "not good" signal).

7) Before opening a position, to confirm the

breakout of the triangle, it is recommended to wait
until the price of the closing Japanese candle was The trader's work, in case of breaking the
outside the triangle and only then open a position. triangle, consists of the following steps:

8) It is recommended that the price breakout 1) We draw a triangle pattern and waiting untill the
occurred at a distance from 1/5 to 3/4 of the length price will break through one of the sides. After
of the triangle horizontally. If it happens later, the that we are waiting for confirming of a signal by
triangle loses its breakout impulse and further price
closing of a Japanese candlestick outside the figure.
movement may be uncertain.
We monitor the volume.
9) If the angle of tilt of the triangle is more directed
upwards, the price is likely to go up and the 2) We are going to open a position in direction of
opposite is the case, if the angle of tilt of the the price breakout. We are trading according to
triangle is more directed downwards, the price is the trend. You can do it immediately after the
likely to go downwards as well.
breakout or wait for the new support/resistance to
10) The fastest exit from a triangle is assumed to be confirmed (depending on the trend). Enter the
occur when the last wave of the triangle does not market on the pullback from the support/resistance
touch its boundary, but turns earlier. line (triangle resistance/support line).
The space inside the "Triangle" figure can be
11) Once one side of a triangle is broken, it often divided into intervals. If the exit occurs on the
becomes a support/resistance level (depending on interval from 1/2 to 2/3 of the figure length, the
which way the price was broken).
effect of such an exit will be maximal. If the price
12) After the breakout, the price will go to the side has entered the last third of the figure, then, as a
of the breakout for a distance equal to at least the rule, there is consolidation and there will be no
height of the triangle in its highest part. rapid price movement.
If the breakout occurred in the direction of the
previous trend, the effect will be maximal, and the
price will pass a great distance. And most likely, the
distance of movement in the direction of the
breakout will be equal to the distance that served for
the formation of the figure.

3) We determine the point to close an opened

position by the width of the widest part of the Example of setting a target on a "Ascending
triangle. The target of working out the figure is triangle".
equal to the height of the widest part of the triangle
(price range from support to the highest price peak).
We measure the distance of the widest part of the
figure and carry it down to the triangle breakout
point.

4) For more reliable profit taking, we exit at

80% of length of the planned movement before
the rest. If we assume the whole width to be 100%,
we should exit the position at a distance of about
80% of the planned movement. It is better to leave
the position before others. It is always the less
greedy who make money. Very often at the end of
the movement there is not enough liquidity to close
a large position, the strength of the movement
weakens when everyone starts to exit at the same
time according to "TA rules". Be less greedy, as a
result you will be richer for everyone. I use this way
of determining the target, but I take into account
other aspects when entering a position. For Example of setting a target on a "Descending
example, volume, local support/resistance levels, triangle".
activity in the buy/sell stack, transactions of a
certain cryptocurrency in the network and more.....
Only all of these things together give a result.
It is also important that if the price is trading in
your favour, and according to the plan you should
have already fixed the profit, it is reasonable to stay
in the position while you get an additional profit
instead of the planned one. But, you should not
forget about protecting your profit with stop-loss
or partial fixation.

There must be a strategy and a plan. At the same

time, your strategy and plan should be plastic to
market situations.
Example of setting a target on the "Symmetrical Example of working out the targets inside an
triangle". "Expanding triangle".

Stop Loss is placed where the logic of entry is lost.

This is the only triangle that allows you to trade

very profitably inside the figure. Because in all
other triangles, as the figure ages (forms), the waves
Example of setting a target on the "Expanding decrease, but here they are increasing on the
triangle". opposite. I trade inside the "Expanding Triangle"
quite often.

Always protect your profits! Don't let profits turn

into losses. A compound % does wonders with the
right approach.

Formation of the figure and

volume changes.
Trading volume in "Ascending", "Descending", XAU / USD 1 day.
"Symmetrical" triangles should decrease as the
figure is formed. " Expanding triangle" - the
opposite, when the triangle is formed, as a rule, the
volume increases.

If inside the triangle, price rising is accompanied

by an increase in volume indicators, it is most
likely that the pattern will be broken upwards.
And the opposite, if inside the triangle the price
falling is accompanied by increasing of volume
indicators, then most likely the figure will be
BTC / USD 1 day. 2014
broken downwards. False - volume for the chart
can be "drawn" to deceive.

You need to work logically and not forget to look at

the buy/sell page to understand what is really going
on there. Unattractive picture on the chart does not
mean that everything is so bad in reality.
Many factors can affect on the probability of price
breaking a certain level: type of previous trend
(bullish/bearish), support/resistance lines, closeness
of important support/resistance levels, news.....
BTC / USD 1 day. 2019.
Example of "Ascending
triangle".

ETH/USD 1 day.
Example "Descending triangle".
NEM (XEM) 1 day
BTC / USD 1 week. 2014

Example "Symmetrical
triangle".
BTC / USD 1 week. 2018

ETH / USD 1 week. 2016

XRP / BTC 1 week BTC / USD 1 week. 2016

 XEM / USD 1 day

Example "Expanding triangle".

BAT / BTC 1 day.

 11) "Rising Pennant"(by shape). Targets.

12) "Descending Pennant"(by shape). Targets.

13) Examples of the "Pennant" figure (bullish /

bearish) on trading instruments.

Trading is a hard road to easy money.

Description of the "Pennant"

figure.
CONTENTS:
1) Description of the "Pennant" figure.

2) Features of the "Pennant" figure.

3) Types of "pennant" relative to the trend.

Ascending and Descending.
- "Ascending pennant"(trend).
- "Descending pennant"(trend).
"Pennant" - is a basic pattern of trend
4) Classification of "Pennants" by shape. continuation, it represents a "Flagpole" and two
- Symmetrical pennant (which everyone is used to). converging horizontal lines. This figure reminds a
- The "ascending pennant" (by shape). small symmetrical triangle.
- The "descending pennant" (by shape).
The graphical figure "Pennant" and its types:
5) Differences between the figures "Flag", symmetrical pennant, ascending pennant and
"Pennant", "Rectangle". descending pennant are classic trend continuation
figures and variations of the triangle figure. In other
6) Differences between "Pennant" and "Triangle". words, it is the same "triangle", but with its own
features. They differ in the working out of the
7) Differences between "Pennant" and " Wedge". targets. It will be discussed in more detail below.
The figure got its name because of the converging
8) Trading variations. Targets. support and resistance lines.
- Variant 1: Trading at the distance of the figure's
flagpole. The formation of the "Pennant" means that the
- Variant 2: Trading at the distance of the widest market has formed an overbought / oversold
part of the instrument. situation, when the rapid price movement has
caused an imbalance, so the market should "rest"
9) "Pennant" and volume. for a while before the next movement. That is, the
figure is formed at the moment of a pause in the
10) "Symmetrical pennant"(by shape). Targets. trend, and is a short-term consolidation, after which
the price usually continues to move in the direction 1) The appearance of this pattern is preceded by
of the trend. a sharp price movement in the form of an almost
straight line, accompanied by a large trading
volume.

2) "Pennant" has outlines similar to a small

horizontal symmetrical triangle.

3) "Pennant" is formed around the middle of the

price movement.

4) During the formation of the "pennant canvas"

the volatility step and trading volume decreases.

5) Trading volume increases when the "pennant

canvas" breaks through to the trend side.

6) The "pennant" is forming faster in a

"Pennant" is very similar to the "Flag" figure, as
downtrend.
they both have "flagpoles" and are formed during
strong trends, thus being consolidation figures after
strong movements. Both figures give strong and Types of "pennant" relative to
reliable signals for further price movement in the the trend. Ascending and
direction of the previous trend, when the directions
Descending.
of these figures themselves are opposite to the
trend. And the value of the distance of price
movement after the breakthrough of the figure is
usually equal to the value of the "flagpole" (the
distance travelled by the price before the formation
of the figure).

Features of the "Pennant"

figure.

There are two types of "Pennant" in relation to

the trend:

1) " Ascending pennant".

2) "Descending pennant".
a) "Rising pennant" - A figure resulting from the
formation of a strong impulse aimed at breaking the
resistance level. Its appearance on the chart is
accompanied by a sharp increase in trading
volumes, as a result of which one or two long
ascending candles, called "flagpole", can be
observed. Then, after the impulse reaches a certain
price level, the formation of a small triangle-like
"canvas" occurs. After that, in most cases, further
growth of the current trend continues.

b) "Descending pennant" - a figure absolutely

identical to its ascending formation, but directed
from top to bottom during the progression of a
strong trading impulse on a downtrend. Visually,
the "descending pennant" differs from the ascending
one only in its direction.

Classification of "pennants" by
shape.

The shape of the pennant is divided into three

types:

a) The symmetrical pennant (which everyone is

used to).

b) The ascending pennant.

c) The descending pennant.

 Differences between the figures which figure is being formed.

"Flag", "Pennant", Differences between "Pennant"

"Rectangle". and "Triangle".

1) "Pennant" is formed after a sharp and fast

By the character of formation "Flag and "Pennant" price movement and has a flagpole.
are very similar. They are formed after a rapid
preceding trend and have a "flagpole". This is the 2) The formation period of the "Pennant" is
main thing that unites them. They differ from each much shorter compared to the "Triangle", so the
other only in the shape of the central part of the "Pennant" is a small figure in size. But with
figure - the "canvas". The "canvas" of the figure strong trend movements (especially pumps on
"Pennant" looks like a symmetrical triangle. The " cryptocurrencies) the figure can be with a large
canvas" of the figure "Flag" is like a parallelogram. percentage of movement.
They have the same target working out - to the
height of the "flagpole". 3) Unlike the "triangle", the figure "pennant",
Both figures are formed in the middle of the trend as well as its analogue "flag", has a pronounced
movement. The difference between them is in the belonging to the type of formations indicating
formation of the shape of the "canvas" of the figure. the continuation of the trend.
In the "Flag" figure, the support and resistance lines
are parallel, and they resemble a trend channel (but 4) The most important difference is absolutely
short) located at an angle to the opposite side of the different take profit targets when working out
trend. the pattern.
Sometimes the " canvas" of the flag is horizontal
and thus resembles the figure of a "rectangle". But
the main feature of the "Flag" is the presence of a
"flagpole". It is not present in the "rectangle" figure.
The difference between the "Flag" and the
"Rectangle" is that the rectangle does not have a
"flagpole". This is very important to understand in
trading these figures. Working out the targets of
"Flag" and "Rectangle" is absolutely different, that
is why it is so important to accurately determine
Differences between "Pennant" of the instrument - the central part of the figure
"Pennant" (the height of the "canvas" of the
and " Wedge". figure).

It is also important, if the price is trading in your

favour, and according to the plan you should
already fix the profit, it is reasonable to stay in the
position while you get additional profit instead of
the planned one. But, you should not forget about
protecting your profit with stop-loss or partial
fixation.

Always protect your profits! Don't let profits turn

"Pennant" is formed after a sharp and fast price into losses. A compound % does wonders with the
movement and has a flagpole, the figure right approach.
"Wedge" has no flagpole.
There must be a strategy and a plan. At the same
As well as at formation of triangles, at formation of time, your strategy and plan should be flexible to
"Pennant" figure the amplitude of fluctuations and market situations.
volume indicators gradually decrease. Then at the
moment of breakthrough of the figure the volume a) Variant 1.
indicators sharply increase. The pattern is formed
after a rapid upward/downward trend, usually close Trading on the distance of the figure's flagpole.
to the middle of the movement. "Pennant" is usually This trading strategy is based on the fact that very
formed of 5 - 15 candles (bars). often, after the formation of a symmetrical
"Pennant", the price, having broken through the
figure, passes the distance equal to the flagpole.
Trading variations. Targets. However, it should be noted that this is not always
the case.

There are two main tactics for trading on the

various Pennants:

1) Trading on the distance of the flagpole of the

figure.

2) Trading on the distance of the maximum height

 Sometimes segment CD is located not from the
place of the last local maximum/minimum, but from
the place of breakdown of the figure (3).
Also, very often, when calculating the distance on
the flagpole from the place of breakdown of the
figure to the Target, a shortened flagpole is taken
into account, equal to the distance from the previous
important resistance/support level to the maximum
of the figure.
As soon as the price chart touches our "Target" line
we close our open sell trade. If the instrument with
low liquidity we should start exiting at about 80%
of the maximum planned movement.
In a bear market, trading at the flagpole distance is
similar to the above example of trading in a bull
market.

OMG / BTC 1 hour.

AB - flagpole (distance from the beginning of

flagpole formation to the maximum point of the
figure)
CD - distance from the last local minimum to the
horizontal line - target
1 - maximum of the pattern
2 - last local minimum
3 - breakdown point of the pattern
TARGET - (point where it is necessary to close an
open trade) As we can see if we had exited the position at 80%
The first thing to do is to mark the figure by of the planned movement we would have made
drawing resistance and support lines along the highs money. 100% of the movement was not taken. And
and lows of the figure. this is very frequent, especially in a bull market. As
As soon as the price breaks through the figure, at a rule, shorts work out 100%.
point "3" it is necessary to open a buy trade.
Stop-Loss put just below the last local minimum b) Variant 2.
(just below the point "2").
Next, we need to calculate the place where we will Trading on the distance of the widest part of the
instrument - the central part of the "Pennant"
close our open deal. To do this, let's measure the
figure (symmetrical triangle).
height of the flagpole, the length of which will be
equal from the beginning of its formation to the This strategy of closing targets can solve the above
maximum point of the figure (segment AB). After described problem. Very often, after the formation
that, we put the segment CD equal to the flagpole of a symmetrical "Pennant", the price, having
(AB=CD) from the point of the last local minimum broken through the figure, passes the distance equal
to the maximum height of the figure. This happens
(point 2) vertically upwards.
very often when the trend is not strong enough.
In other words, working on the target as on a nearest target (Take profit) is at a distance equal to
symmetrical triangle. the widest height of the pattern starting from the
breakout point. The second target (Take profit) is
located at a distance equal to the height of the
flagpole of the figure starting from the place of the
last local minimum/maximum on the bullish/bearish
trend.

OMG / BTC 1 hour.

Here is an example of the second variant of target

setting.
As we can see from this example, this time our
target has been achieved. But I would like to
Firstly we outline the pattern by drawing resistance underline once again that each instrument requires
and support lines along the highs and lows of the an individual approach.
pattern as shown in the figure above. When the In all other " Pennants " both in relation to the trend
price breaks through the figure (point C) open a buy and to the shape, the target is set in a similar way.
trade in direction of the main trend. Stop-loss can be
placed at the level of the last local minimum. "Pennant" and volume.
After that, let's calculate when it is necessary to
close our deal (to fix a profit). To do this, we should
determine the maximum height of the figure
(segment AB). Then, from the point of
breakthrough of the figure (point C) we will put
vertically upwards a line equal to the maximum
height of the figure (AB=CD). In point D we set a
horizontal line "Take Profit". And as soon as the
price chart will touch this horizontal line it is
necessary to close our deal.
Pay attention that the "CD" segment is from the
breakout point of the figure, not from the local
minimum as in the previous example. This is
allowed, but it all depends on your working strategy
and a certain instrument.
The "Take-Profit" can also be set at an important
support/resistance level if it is close to the pattern. During the formation of any "Pennant" figure the
There is an individual approach to each instrument, amplitude of fluctuations decreases, while the
but the general tendencies for working out the volume indicators (inside the figure) also decrease.
figure are described in the two versions above. But as soon as the breakdown of the figure occurs,
When trading the symmetrical Pennant pattern, the the volume increases sharply.
 triangle, but with a flagpole.
OMG / BTC 1 hour.

Pay attention to the change of volume indicators

during the 3 phases of formation of the
ascending "Pennant" figure: We discussed the goals and work on the
"Symmetrical Pennant" in pretty much detail in the
1) Flagpole - volume increases. section above. Where "Symmetrical pennant" was
as an example of work.
2) Formation of the "pennant canvas" - volume
decreases. "Rising Pennant"(by shape).
3) Breakout of the "pennant canvas" and Targets.
impulse - volume increases.

"Symmetrical pennant"(by
shape). Targets.

This type of figure is very similar to a rising wedge

without a flagpole. The working methods of trend
continuation figures such as "Symmetrical
Pennant", "Ascending Pennant" and "Descending
Pennant" are identical.

If the flagpole is removed, this figure is very similar

to a symmetrical triangle. Identification of a
pennant on the chart is similar to a symmetrical
Different variants of situations:
The trend is bearish (going down). As you can
see it is simple and predictable.
1) If the figure was formed on a bullish trend, it
A-B - Flagpole.
is most probably to become a reversal figure.
E-B - The widest part of the "canvas" of the figure.
And the strength of the reversal signal will be
Point C - is the point of breakthrough of the figure
average or even above average.
in the direction of the main trend.
Point F is the first target. EB=CF.
2) If the price broke through the resistance level
Point D - the second target. AB=CD.
and went up, it will be a weak signal, which is not
worth trading.
Let's assume that after a sharp significant downward
movement the market has formed a Rising Pennant
3) If the price broke the " ascending pennant"
pattern. We draw resistance and support lines, thus
upwards (resistance line) in a bearish trend.
marking the figure. As soon as the price breaks the
In this case, the signal will have weak strength.
pattern at point C and closes the candle below the
pattern, we open a short position.
Therefore, it is advisable not to trade in this case.
During the formation of any "Pennant" pattern, the
Target 1.
amplitude of fluctuations decreases, while the
Our first target will be point F, which is located on
volume indicators also decrease. But as soon as the
the distance from the breakdown point equal to the
breakdown of the figure occurs, the volume
maximum height of the " canvas ". We can find our
indicators sharply increase.
target in the following way:
We take the highest part of the figure (distance E-B)
Working out the Ascending Pennant targets on
and from the breakdown point C draw a parallel line
the Bearish Trend.
downwards to the distance C-F, equal to the
distance E-B. EB=CF. Then, draw a horizontal line
through the point F. Point F will be our first target.
 Target 2. "Descending Pennant"(by
Our second target will be point D, which is located
on the distance from the breakout point equal to the shape). Targets.
length of the flagpole. We can find our target in the
following way:
We measure the height of the flagpole (A-B), which
is equal to the distance C-D and from the breakout
point C draw a parallel line downwards equal to the
distance A-B (the length of the flagpole), AB=CD.
Then, draw a horizontal line through the point D.
Point D will be our target #2. As soon as the price
hits point D we close our short position and take
profit. This pattern is very similar to a descending wedge
without a flagpole. The principles of working with
TNT / BTC 4 hours. "descending pennant" on a bullish trend are similar
to the principles of working with "ascending
pennant" on a bearish trend, but everything is the
opposite.
During the formation of the ""Descending
Pennant"", the amplitude of fluctuations decreases,
while the volume indicators also decrease. But as
soon as the price breaks through the figure, the
volume indicators increase sharply.

Example of working out targets on a TNT / BTC

coin. A large " Ascending pennant" with a flagpole
consisting of a small flag.
It's a complicated pattern. But it's very profitable.
Look at the time frame and percentages. You need
to realise that some figures pass into others. Those
who think that the chart should show ideal patterns,
easily visible at first sight to every beginner, which
are illustrated in various trading books, are very
much mistaken. Perfect figures are drawn only
when everything is planned and need to be seen by
99% of market participants.

Different variants of situations during the

formation of the " Descending pennant" figure.
1) If the descending pennant was formed during common occurrence. That there will be a much
a bearish trend, the figure is likely to become a bigger movement than 5.37% also was indicated by
reversal pattern. And the strength of the reversal the very steep angle of the "canvas" of the "
signal will be average or even above average. ascending pennant". Though 5.37% also worked out
not badly.
2) If the price breaks the support level and
moves downwards, it will be a weak signal, which ZEC / USD 1 day.
is not worth trading on.

3) If during a bullish trend the price breaks the

descending pennant downwards (support line),
then in this case the signal will have a weak
strength. Therefore, it is recommended to stay
away from trading in this case.

Working out of the targets is similar to " Ascending

pennant" or "Symmetrical pennant". The first target
is located on the distance, which starts from the
Example on the ZEC / USD coin for this type of
breakout point and is equal to the maximum height
figure in combination with a downtrend. Pay
of the "canvas" of the figure, the other target also
attention to the volume.
starts from the breakout point but is on the distance
equal to the height of the flagpole.
XAU / USD 1 day.

Examples of the "Pennant"

figure (bullish / bearish)
XAU / USD 1 day.

"Descending pennant", the first stop of the price

was just at the height of the "flagpole" (7.7%), then
the price after a long consolidation went higher.
On this example we can see clearly how except for
the planned movement on working out of this
formation according to TA rules (5.37%) from the
break of the local support level, the figure works out
much lower (8.34%), but it is predictable if we take
as a basis the height of the flagpole not from the
support, but from the local high. And this is a very
 ARDOR / BTC 4 hour.

"Descending pennant" on the coin ARDOR. As we

can see, such patterns are most often forming on a
small time frame. It is very similar to the "
Descending wedge ". But there is a flagpole
(impulse). If we identified it as a wedge, the targets
for working out were much smaller (width of the
widest part of the " canvas" of the wedge). It is also
worth to note that the "Flag" model is much more
common than the "Pennant" model. The ratio is
about 80% to 20%.

For a minority of people to make money, the

majority of people need to lose money in the
market. The more the majority plays by the rules
imposed by the minority, the more money they
lose. Therefore, the minority makes money.

The following rule applies here - whoever is smarter

and more malleable makes money. Therefore, the
smart one is the one with money and controls the
price, the more stupid ones just always adapt to the
market.

Your first enemy is lack of experience and

knowledge.

Your second enemy is your greed and your sense

of loss of profit.
 connects the neighbouring two bottoms between the
tops. The same is true for the "Inverted Head and
Shoulders" figure - its mirror-opposite variant.
It is important to remember that the Head and
Shoulders is formed after an uptrend and turns the
price, creating a new downtrend. The figure has
three clearly defined tops. The left and right
shoulders are not always symmetrical. They can
have different widths, highs or lows. The most
important condition is that they should not be higher
than the "Head" of the figure.

Features that should be paid

attention to

CONTENTS:
1) Description of the "Head and shoulders" figure.
2) Features that should be paid attention to.
3) Mirror reflection of the figure - "Inverted Head
and Shoulders".
4) Setting targets while working with the figure
"Head and Shoulders".
5) Forming the figure and volume changes.
6) Examples of the figure "Head and Shoulders" on
trading tools.
1) Uptrend is required before the figure. Since
Head and Shoulders is a reversal pattern.
Description of the "Head and
2) The left shoulder marks the maximum of the
shoulders" figure current uptrend. The price falling after this
maximum completes the formation of the first
shoulder. As a rule, the bottom after the left
shoulder does not cross the current trend, but
confirms it. The minimum of this bottom marks the
first neckline point. The Neck line is forming.

3) The head starts from the first bottom. The price

rising lifts the head higher than the previous high
(left shoulder), thus forming a new price high. The
bottom after the head marks the second neckline
The Head and Shoulders pattern is one of the
point, thus forming support level (the "Neck" line of
reversal patterns in technical analysis. The Head
the pattern). Price falling which occurs before this
and Shoulders pattern is quite common to occur
bottom is breaking the previous main trend.
after an uptrend. The Head and Shoulders represents
three consecutive peaks, the middle one (head) is
4) The right shoulder follows the second bottom.
the highest, and the other two peaks on the sides
The right shoulder is below the middle peak (head),
(shoulders) are lower and about equal.
and about the same level as the left shoulder.
The line at the Head and Shoulders support level is
Ideally, the shoulders on either side of the head are
the Neck level and at the same time the trend line. It
symmetrical, but it is often far from symmetry. Mirror reflection of the figure -
(Example below). The price falling in the right
shoulder should break through the support line (the "Inverted Head and Shoulders".
"Neck" line of the figure).

5) The neckline is formed by connecting the

minimums of two bottoms of the figure. The first
minimum marks the end of the left shoulder and the
beginning of the head, and the second minimum
marks the end of the head and the beginning of the
right shoulder. Depending on the height of the
minima, the neckline can be horizontal or angled. A
descending neckline is considered more bearish and
foretells a more severe price fall after the pattern.
An ascending neckline, on the contrary, foretells not
such a strong fall.

6) Trading volume plays an important role in

confirming the Head and Shoulders pattern. From
the left shoulder to the head, volume tends to The "Inverted Head and Shoulders" pattern is a
decrease. During the price fall after the head, mirror image of the "Head and Shoulders" pattern
volume may increase. At the end of the right and has the same properties and features. This
shoulder, at the support level ("Neck") crossing, figure is formed at the end of a bearish trend. It also
trading volume tends to increase strongly. has three clearly defined bottoms ("lows"). The
neck line passes through two peaks, which are
7) The intersection of support ("Neck") is the located between them (lower extremes).
final stage that confirms the Head and Shoulders The formation of this pattern indicates the
pattern. upcoming turn from a bearish trend to a bullish one.
Unlike the common head and shoulders, the
confirmation of this bullish pattern depends much
8) Support turns into resistance (mirror level)
after the figure is completed. Sometimes bulls try to more on the trading volume. Its formation is
raise the price after the figure, but the new preceded by a bearish trend, and it represents three
resistance rejects their attempts, and the price falls consecutive troughs, with the outermost of them
in a new downtrend. (shoulders) being about equal in height but the
centre (head) is the deepest. Classically, the
9) The pattern target is the level that the price is shoulders should be approximately equal in height
likely to take after passing through the "Head and and width, but in practice some asymmetry is
Shoulders" pattern. It is important to realise that the allowed. The corrective maximum after the left
pattern target is only a guess. Explanation and shoulder and head form the neck line. Read more in
example in the section below in this article. detail in the article "Inverted head and shoulders".
 Setting targets while working with such strength that the price drops very rapidly
and by a large percentage.
with the figure "Head and
Shoulders" An example in which the base of the right
shoulder is lower than the base of the left
shoulder The neck line goes downwards.

It is also important that if the price is trading in

your favour, and according to the plan you should
have already fixed the profit, it is reasonable to stay
in the position while you get an additional profit
instead of the planned one. But, you should not
forget about protecting your profit with stop-loss or
partial fixation.

Always protect your profits! Don't let profits turn

into losses. A compound % does wonders with the
The base of the right and left shoulders are located
right approach.
at the level of the neck, and the base of the right and
left shoulders can be at different levels. Targets are
There must be a strategy and a plan. At the same
set to work out the figure in the same way as in the
time, your strategy and plan should be plastic to
classic variant from the example above.
market situations.
If the "Head and Shoulders" pattern appears on the
uptrend and the right shoulder is lower than the left
one, it strengthens the sell signal.
If an inverted Head and Shoulders pattern appears
on a downtrend, a higher right shoulder relative to
the left shoulder strengthens the buy signal.

The key factor in confirming the Head and

Shoulders pattern is when the price crosses the
neckline. The price crosses the neckline from above
downwards and there is a high trading volume, it
means that there is a new unsatisfied offer in the
market. This new offer can push the price down
 As we can see when the right shoulder is forming,
volume increases, due to the fact that everyone
wants to take the potential move. We also see a very
strong increase in volume when the "Neck" line is
broken. This is due to the final confirmation of the
pattern and a lot of traders are getting into the
market.
A pullback to the mirror level shows the opposite
decrease in volume. Nobody believes in the growth
and breakout of the resistance line (mirror level).
Pullback from the resistance line confirms only
traders' expectations and confirmation of the figure
- the volume increases rapidly. The latecomers are
Forming the figure and volume losing. The trend is finally turning downward.
changes
Examples of the figure "Head
and Shoulders" on trading tools
MANA / BTC 1 day

To get confirming buy/sell signals on the chart

during the formation of the "Head and Shoulders"
pattern, the change in the trading volume is very Almost completely worked out the target. I always
important. set the target 20% less than it is supposed to be
according to TA rules. I think the reason is
understandable.

Be less greedy for the others and as a consequence

you will be richer for the others.

ETH / USD 1 day

Please note when setting targets on this highly
liquid coin, which is ETH and the KRAKEN stock
exchange, I did not take shadows into consideration.
Shadows should be taken into account on low
liquidity exchanges and trading instruments.
Because slippages can be triggered there due to low
liquidity. In highly liquid coins it can happen, but
very rarely.

It's better to take less profit, but for sure, than to

take a lot of it never.

ETC / BTC 1 day CONTENTS:

1) Description of the "Inverted head and shoulders"
figure.
2) Features that should be paid attention to during
the formation of this model of the figure.
3) Mirror reflection of the figure - "Head and
shoulders".
4) Figure forming and volume changes.
5) Setting targets for working with the "Inverted
head and shoulders" figure.
6) Examples of the "Inverted head and shoulders"
figure on trading instruments.

Description of the Inverted

A perfect 61% working out. This is very rare. By Head and Shoulders figure
the way, it is worth noting that the patterns are often
not very similar to the pattern examples in books. If
you will look for copies of pattern sketches one-to-
one from books, you are doomed to a small profit.
Of course, there are exact copies of examples from
books, but they are few. Here you need to develop
plasticity and visualisation in searching. And the
most important thing is understanding why it is
formed this way and not otherwise. All this will The "Inverted Head and Shoulders" pattern is a
come over time and practice. mirror reflection of the "Head and Shoulders"
pattern and has the same properties and features.
This figure is forming at the end of a bearish trend.
It also has three clearly defined bottoms (bottoms).
Do not be greedy in trading. Being greedy creates The neck line passes through two peaks, which are
poorness! located between them (lower extremes).
The formation of this pattern indicates the
upcoming turn from a bearish trend to a bullish one.
Unlike the common head and shoulders, the
confirmation of this bullish pattern depends much
more on the trading volume. Its formation is
preceded by a bearish trend, and it represents three
consecutive troughs, with the outermost of them
(shoulders) being about equal in height but the 4) The minimum reached during the formation of
centre (head) is the deepest. Classically, the the right shoulder will be higher than the minimum
shoulders should be about equal by height and of the head, and in the classic case at the same level
width, but in practice some asymmetry is allowed. as the left shoulder. However, in practice this
Corrective maximum after the left shoulder and situation is quite rare, so some asymmetry in both
head form the neck line. height and width of the shoulders is allowed.

Features that should be paid 5) The neck line is built through 2 points, which are
the maximums of price corrections after the left
attention to during the shoulder and head. Classical inverted head and
formation of this model of the shoulders suggest that the neck line will be almost
horizontal. But often the neck line can have some
figure slope, the direction of which is also an additional
signal. An upward slope suggests more bullish
strength than a downward slope.

6) The final confirmation of the inverted head and

shoulders formation, and, therefore, of the bearish
trend reversal, occurs when the neck line is
penetrated. The obligatory condition is a strong
increase of trading volumes. Since the moment of
breakout, the neckline turns from a resistance line
into a support line (mirror level).

7) To estimate the potential for the price movement

it is necessary to measure the distance from the
price minimum of the head to the neckline and
1) The inverted head and shoulders should be postpone it upwards from the point of its
preceded by a pronounced downtrend, and this breakdown. This level is a rough reference point. I
figure will be the final end of it. usually exit a position completely at 80% of the
potential movement.
2) When the left shoulder is formed, the downtrend
reaches a new minimum, followed by a correction. 8) Trading volume is crucial in the formation of an
The maximal point of the correction, as a rule, does inverted head and shoulders. A neckline breakout
not break through the resistance line of the must be necessarily confirmed by a strong rise in
downtrend and becomes the first point for the trading volume. Without it, the breakout should be
formation of the so-called neckline. At this point it considered as fake.
is not yet possible to assume a trend reversal,
because reaching a new low and not breaking
through the resistance line rather indicates its
continuation. Mirror reflection of the figure -
Head and shoulders
3) The price correction that completes the formation
of the left shoulder is followed by a decline that
reaches a new low. The following price correction
completes the formation of the head, and its
maximum is the second point across which the neck
line is built. The maximum of this correction, as a
rule, breaks the resistance line of the trend,
signalling its weakening and the bearish pressure on
the market is decreasing.
 The crucial point is breaking of the neckline, which
The Head and Shoulders pattern is one of the must necessarily be accompanied by a significant
reversal patterns in technical analysis. The Head increase of trading volumes, acceleration of price
and Shoulders pattern is quite common after an movement and preferably price gaps.
uptrend. The Head and Shoulders represents three
consecutive peaks, the middle one (head) is the
highest, and the other two peaks on each side
(shoulders) which are lower and about equal. The
line at the resistance level of the Head and
Shoulders is the level of the Neck and at the same
time the trend line. It connects the neighbouring two
bottoms between the peaks. The same is true for the
inverted head and shoulders figure of its mirror-
opposite variant.
It is important to keep in mind that the Head and
Shoulders is formed after an uptrend and reverses
the price, forming a new downtrend. The figure has
three clearly defined peaks. The left and right
shoulders are not always symmetrical. They can
have different widths, highs or lows. The most
important condition is that they should not be higher
than the "Head" of the figure.

Figure forming and volume

changes Setting targets for working with
the "Inverted Head and
Shoulders" figure

Trading volume is less important in the formation of

the first part of the figure than in the second part. It
can even grow when reaching the minimums of the
left shoulder and head, indicating the growth of
pressure on the market from the "bears". However, The distance from the head level to the neck line,
the growth, which completes the formation of the drawn upwards from the resistance line breakout -
head, should be necessarily accompanied by this is going to be the target. I usually exit at 80% of
increasing trading volumes, which indicates an the movement. It is better to exit early but for sure,
increase in the "bullish" activity. The following than later when it may be too late. It's much related
reaching of the minimum of the right shoulder to large volume. If you do not have a large position,
should be necessarily accompanied by decreasing of you can always exit.
the trading volume, which signals about weakening
of sellers.
 Examples of the "Inverted Head
and Shoulders" figure on
trading tools
ETH / USD 1 day

Buy signals for the Inverted Head and Shoulders

pattern:
The target is almost completely worked out. I
1) breakout of the resistance line (neck). always set the target 20% less than it is supposed to
be according to TA rules. I think the reason is clear.
2) rebound from the resistance line (new support
line) from the top when the price moves back
after the breakout. BTC/USD 1 day

Volume: high on the first low, decreases on the

second and third lows, increases during the
following growth and, especially, during the
breakout of the figure.

It is also important that if the price is trading in

your favour, and according to the plan you should
have already fixed the profit, it is reasonable to stay
in the position while you get an additional profit
instead of the planned one. But, you should not
forget about protecting your profit with stop-loss or
partial fixation. Here we can see the situation when the target was
18%, but the workout was at 24%. It should be
Always protect your profits! Don't let profits turn noted that this is a rare phenomenon, mostly it is
into losses. A compound % does wonders with the opposite. While setting targets, it is necessary to
right approach. take into consideration the local levels and what
happened near to them. It is also important to
There must be a strategy and a plan. At the same analyse the general situation on the market, the
time, your strategy and plan should be plastic to activity of developers of a certain coin, the news
market situations. and major events. Everything is connected. Those
who trades not only on the chart, and takes into
account other factors in their trade has an
undeniable advantage.
 From the reversal zone (the third part of the
inverted head and shoulders) to the marked reset
zone 13 - 25 is more than +1300%, although the
highs for the extremely greedy and stupid (fake
targets so that they were not afraid to buy on
pullbacks) are more than +2100%.
For many people at the time (publishing ideas 3 10
2020) 1.7 years ago it was fantastic. Many people
were writing to me why I show the main trends
Manipulations with swap, as well as reversal figure
except for the most ideas for work, I guess it's
"Upside-down Head and Shoulders" and realisation
understandable why.
of inadequate cup targets. From the reversal zone on
A high is sometimes a low, but also the opposite, all
the chart +8800%, from the base of the cup is over
the hype crap (a swear word clearly expresses an
20,000%. But the first 400% is exactly into the
emotion) on the lows is a high. But people who are
target before the swap.
not trend orientated are always outsiders. They sell
it cheap with minimal profit, and buy it expensively
"at the lows".

Another example of same formations and realisation

of inadequate targets. Without the swap
manipulation. In this one, the pamp is real. Not a
public trading idea.
Over +2100%.
 1) Description of the wedge

The figure is mainly referred to as a trend

continuation figure, this figure is one of the many
variations of the triangle. The most noticeable
CONTENTS: difference is that one of its vertices has a clear
downward or upward slope, and the figure itself is
1) Description of the figure of the wedge. elongated. The "wedge" is quite common on
charts, and the time scale can be very different
2) Types of wedge. Rising and descending wedge
As a rule, like a flag, a wedge is slanted against
the direction of the prevailing trend. Thus, a
3) A descending wedge on a bullish trend.
wedge pointing downward is considered a bullish
pattern, while a wedge pointing upward is
4) Example of a descending wedge after a bullish
considered a bearish pattern. A wedge can also
impulse.
form at the top or base of a market, signaling an
imminent trend reversal. A clearly defined upward
5) A descending wedge in a bear market.
wedge can sometimes be seen at the last stage of
an uptrend.
6) Making targets on these figures:
No matter where this pattern is formed - in the
a) Targets for a descending wedge in a bullish
middle or at the end of the price movement
trend.
interval - it is always necessary to be guided by
the rule that a wedge directed upwards is a bearish
b) Targets for an ascending wedge in a bearish
pattern, and a wedge directed downwards is a
trend.
bullish pattern.
c) Targets for a descending wedge in a bearish
If the "Wedge" is formed in exact accordance with
trend.
the current trend, then a change in market
direction can be expected without any change in
6) Deceptive maneuvers when working out targets
trend. In other words, the formation of a bullish
on wedges.
wedge within an uptrend is not a sign of a trend
change. On the contrary, the market will continue
7) The reversal properties of the wedge pattern
moving in the same direction. But there are
exceptions, but they are rare. We will consider
8) Targets for reversal formations.
them below.
9) Examples of working with the wedge figure on As a rule, such a model manages to pass two
the market. thirds of the distance to its top before breaking
through, and sometimes even reaches it.

The wedge, as already mentioned, can be formed

on different timeframes, and the larger the
timeframe on which the wedge was formed, the
more accurate its indicators.
The pattern is formed during a period of slowing formed, with volume and volatility indicators
down of the fall or rise in the value of an asset. slowly falling. Prices are no longer able to fall
The maximums or minimums are still being further, but at the same time, continue to very
updated, but the price is already falling, or rising, uncertainly update local lows. This shows that the
slightly. This indicates a decrease in the interest of pressure of buyers (bulls) is gradually increasing
traders in the market. And with a high probability the
descending wedge will be broken upwards by
2) Types. The ascending and descending buyers.
wedge
It is necessary to keep an eye on the price falling
below the lower level, which is also the support
line. If the support line is broken, the downtrend
will continue. This is more typical for instruments
with small capitalization and good price control
by the market maker of the instrument.

Very often deceptive maneuvers are made, what

the crowd believes in is drawn and at the most
crucial moment due to full price control the
instrument goes against the crowd's expectation
TYPES OF WEDGE:

1) "Rising wedge" is when both sides of the

figure point upward.

2) "Downward wedge" is when both sides of

the figure point downward

4) An example of a "Downward Wedge"

after bullish momentum.

ANDOR (ANDR) / BTC 1 H.

3) Downward wedge

It is also worth noting that there can be as many

waves inside the wedge as you like. There are no
clear rules about the maximum number of waves.
Example on the ANDOR coin formed 5 waves
A descending wedge is formed when the price
before the upward breakout. All 5 waves and the
decline slows down and a tapering pattern is
breakout itself, and further movements I traded. patterns in combination with the downtrend that
The funny thing is that the price after the impulse are formed.
went down almost 80% of its height. It is very
profitable. The breakout itself gave from the XLM (Stellar) / BTC 1 D.
minimum point to the high +16% for 2 days. But
trading in the process of pattern formation gave
me about +80%. But unfortunately it is impossible
to work with large sums on such coins.

The Wedge's breakthrough a few hours later.

The first target is taken. Two times +9%.

Formation of several descending wedges on a

bearish trend (dump).

As we can see 3 consecutive descending wedges

were formed, each of which was a continuation of
After 2 days, a second target of +16% was
the downtrend. Each wedge was clearly working
taken.
out its targets.

I also very often trade waves inside the wedge

itself. More precisely, I almost always trade them
at the beginning of the formation. At the end of
the formation (narrowing volatility - I am waiting
for an up/down breakout).

The much lower in percentage you set your goals

in trading tools, the more likely you are to make
money.
5) Downward wedge in a bear market.
For me trading within a pattern is safe and
predictable, similar to horizontal accumulation
channels with some peculiarities based on my
experience. A compound percentage and a plan
for any eventuality does the trick. Sometimes,
when you go with the price down correctly even
without a short position, you can earn all the
proverbial "X's" which can be likened to a profit
like a coin pump, but that's if the volatility is
acceptable. If the volatility is not high, you will
get only losses or just waste your time.

In 90% of my trades, where the "wedge" pattern

was used, there were trades of the descending
wedge on the bear market. I managed to take the
planned profit in most cases. Why search for
something not clear and difficult to predict if there
is a model, which with a high probability always
works out. On the XLM coin, it is these sequential
A few examples of descending wedges on my
trading ideas for clarity:

WTC/BTC +40%, +40%, +27%, +80% CHZ /BTC +160%

ETC/USD +240% (+190% +44%)

LINK/BTC +120%

RLC/BTC +350%
TLM/USDT +330%

TVK/BTC +180%
 DCN/USDT +2600%

TVK/BTC +330%

Same coin and pumping at +2600% after working

off the local descending wedge targets

SC/BTC +770%
DCN/ETH +300%

PHB/BTC +360%

DCN/ETH +1160%

PHB/BTC +1000%

DCN/USDT +180%
 GTO/BTC There must be a strategy and a plan. At the same
time, your strategy and plan should be flexible to
market situations.

a) Targets for a descending wedge on a bullish

trend.

A downward wedge is a bullish pattern, because

the trend is upward and the price has broken
through the resistance line (went up). This is a
strong signal and should be traded on it.

If the price would go in the opposite direction

(opposite to the trend), it would be a weak signal.
Trading in this case is not recommended as it is
too risky. Trading against the trend is a very
thankless task. But most people do it.

For a trader, it is necessary to properly use the

signals that the descending wedge pattern gives
us.

Trade according to the algorithms of your

trading strategy based on your experience and
risk management, not emotional outbursts. Don't
be a pixel of the psycho-emotional market herd
being manipulated.

6) Setting goals for the figures data.

In the figure of the "Downward Wedge on the

Bullish Trend" we can see that:

A - is the breakout point of the figure.

C - is the last maximum (resistance point) before
the price breaks through the figure.
It is also important, if the price is trading in your B - is the price level where it is necessary to open
favor, and according to the plan you should a buy position..
already fix the profit, it is advisable to stay in the
position while you get an additional profit
instead of the planned one. But, you should not It can be seen that the trend is upward (bullish)
forget about protecting your profit with stop-loss and the breakout happens in the direction of the
or partial fixation. current trend. This shows a strong trend and that
the price is likely to go a long distance in the
direction of the trend.
Therefore, when the price breaks through the BPCL 1 D
figure in point "A", we need to draw a horizontal
line through point "C" and wait for the price to hit
it in point "B". It is also desirable to wait for the
candle to close behind the resistance level after
breaking the pattern.

It is important not to break an important level,

namely the breakout and necessarily fixing above
the broken level. Do not repeat the mistake of the
majority! The second variant of setting targets on a
descending wedge on a bullish trend
It is better to buy a little more expensive but
accurate than cheap but with a dowry third BPCL 1 D
bottom. Greed makes people poor, wicked and
envious.

If you are unable to control your position and use

STOP LOSS, it is advisable to place the protective
order below the resistance level line (sometimes it
is even placed below the support level of the
"Wedge" pattern)
b) Targets for an ascending wedge in a bearish
The target for closing a position, when trading on
trend.
the "classic wedge" is usually not designated and
usually proceeds from the current situation
(determination of important resistance/support
levels).

I have shown in the figure PURPOSE 1 and

PURPOSE 2. From my practice, more than half of
trading signals on this model do not work out by
PURPOSE 2. In most TA books, they teach to set
it exactly on the PURPOSE 2. Coincidence? No, I
don't think so... Just copying each other's theory,
not oriented in real practice in the markets.

Also when working with the "Wedge" it is

necessary to look at the trading volume as a
confirming factor. When the "Wedge" is formed,
Targets on the ascending wedge are set similarly
the volume indicators must fall gradually, and
on the same principle as on the descending wedge.
when the "Wedge" is broken through, the volume
I will not describe and repeat myself.
indicators must increase sharply
I would like to say that this model is very similar
First variant of setting targets on a descending
to the rising pennant, but the only difference
wedge on a bullish trend
between them is that the rising wedge has no
flagpole. Consequently, these two models have
very different purposes. Unlike the rising pennant,
the rising wedge has much more modest goals.
First variant of setting targets on an ascending The first and second targets are taken. If the price
wedge on a bearish trend reached +60%, it was quite possible to take +40%.

ETH / USD 1 D The second variant of setting targets on a

descending wedge.

BCN / BTC 1 D.

The second variant of setting targets on an

ascending wedge on a bearish trend

ETH / USD 1 D The widest part of the figure is taken and

projected into the penetration zone. Two variants
are effective in operation. Here from the example
we see just a sniper accuracy of 54%.

7) Deceptive maneuvers in wedge target

practice.
c) Targets for a descending wedge in a bearish
trend.

Very often do a deceptive maneuver, break the

descending wedge to the entry point C-B level.
Sometimes on cheap coins, it is a specific %.
Sometimes it reaches +10-30%. In satosh coins, it
First variant of setting targets on a descending is Xs (example on DENT).
wedge
BCN / BTC 1 D
As they teach in TA books where it is "safe" to
enter and then sharply reverse the price (see the
volume of real purchases and price fixing!) Here
are some examples.
 XRP / BTC 1 D

Here's what happened. We broke through a

descending wedge down without a pullback.
Although according to the books it's considered a
Examples of deceptive actions when forming a bullish formation. It is clear that they drew it so
wedge. clearly for everyone to see and then go against the
expectations of the majority.
DENT / BTC 1 D.
XRP / BTC 1 D.

A "Downward Wedge" was forming, which would

probably become a trend reversal figure. Everyone
saw and understood it perfectly well. The support
of the wedge broke down, as the main crowd was
waiting for the upward breakout. Passengers are
dumped, there is no faith, many want to get out at
least at no loss.

DENT / BTC 1 D.

7) The reversal functions of the wedge

shape

As a result, pump when leaving the wedge at

120%. Rollback. A little held and collapsed with
one candle.

It's worth noting that when coming out of the

wedge, the developers released about 10 news
items for the summer. The plan was clearly not If the wedge has a slope in the direction of the
+120%. Recall a year ago this coin made +500x ! existing trend, then in this case it can be
(not 500%) The price was raised 500 times! And considered a reversal figure, as the trend is likely
of course it was 100%. to reverse. In this case, the figure is formed at the
top of the chart.
No one knows the exact future, including those
who create it! Only those who constantly give
money away in the market know the exact
future!
 through the instrument in the direction of the
trend, it would be a weak signal. Trading in this
case is not recommended as it is too risky.

USD / JPY 1 D

XAU / USD 1 D

The huge "Downward Wedge" was a reversal

pattern of the global trend and changed the long
term trend to an upward trend.

All targets are taken. This rarely happens.

Example on a very long time "Downward Wedge"
(analogy as ZEC). There are much more targets
In this case, an ascending wedge is formed on an here, because there are more expressive waves
uptrend. Resistance and support lines are directed inside the "Wedge".
upwards, and the breakout of the figure usually
occurs downwards. In my opinion, it is necessary On such formations you need to work with
to work in such a figure with only 2 targets. hypothetical "Mirror Levels"

8) Targets for reversal formations.

Sequence of work on goal setting:

An example of another variant of trend reversal When a descending wedge pattern appears in a
using a wedge. A descending wedge is formed on bear market on the chart, draw resistance and
a downtrend. Support and resistance lines are support lines at the extremes (maxima/minima).
directed downward, while the breakout of the The above chart of a descending wedge in a bear
figure is usually upward. Such descending wedges market shows that:
are often traded.
A - This is the breakout point of the pattern.
It is also worth noting that if in both cases B - Is the last maximum (resistance point)
(ascending and descending wedge) the price broke before the price breaks the pattern.
C - It is the price level where it is necessary to someone allows it, plays along with the crowd in
open a buy position. what they believe in.
E - Is the maximum point of the pattern.
When necessary, TA rules stop working. Be
I have shown in the figure GOAL 1 and GOAL 2. malleable and smart, calculate all your own and
From my practice, more than half of trading other people's options ahead of time.
signals on this model do not work out by GOAL
2. In the textbooks on technical analysis they The downward wedge on MATIC should have
teach to set only one target on the maximum point worked out (more probable probability) at +67%
of the figure - PURPOSE 2. Practice shows that maximum according to the rules of "smart books"
this does not work in most cases. for not quite smart people! But we saw the exit
from the wedge and pump at 1000%.
It is better to take a small profit always all the
time than a big profit never! MATIC / BTC. 1 D.

It is very important, when setting targets, to focus

on strong supports and resistances of the time
frame on which you are working on a particular
instrument. Support/resistance levels can have a
huge impact on the price movement and,
consequently, on the working out of targets for
this figure. So to say, they have much more
weight than the figure itself, which is formed.

Often, the move that follows the breakdown of the

"Wedge" has a distance equal to the length of the
"shaft", i.e. the path traveled by the price before
the beginning of the formation of the figure. In Example on the coin MATIC / BTC. Instead of
this case, you can get a good profit. As an option, the maximum +67% pump at - 1000%. So the
you can do the following: after the price has gone very goal setting shown and described above is
some distance up, you need to move the open relevant more for instruments with large
position to the breakeven zone (STOP LOSS capitalization.
move to the level of opening of our position or
even higher). In other words, we move STOP Why did it happen on this coin MATIC? Very
LOSS behind the price (profit protection), but not simple. MATIC is a low capitalization. Due to
very close, so as not to be knocked out, as small capitalization it is possible to accelerate the
cryptocurrencies have a very high volatility. Then, price well. This is due to the complete control of
when the price goes to a distance equal to the the price by the market maker of the instrument or
"tree" we fix the profit. large traders in collusion, who act as market
makers of this instrument.
On small-capitalization cryptocurrencies, a
descending wedge can work against all the rules Believe me, I have experienced this ("sense of lost
of technical analysis. You need to understand profit") several times on other instruments in my
what is happening on the instrument (coin). TA time. A prime example was working on DCN in
books are written partly for crowd management. 2017. Went out most of the position +200-300%,
The more educated a society is by the rules of and the rest of about 10% (not sorry to lose)
technical analysis, the better TA works on the laddered up to 1000%, and the instrument went to
market. The crowd acts as a single programmed +8000% and high volume. At an average price of
organism. about 5000% of the position set, the profit would
have been huge!

It is necessary not only to know the rules of But before this pumping on this instrument with a
technical analysis, but also to understand what, relatively small amount of about 1500$ thousand
how, and why it works. Somewhere TA rules for 1.5-2 months of work with a complex
work, and somewhere they work only because percentage of intraday trading, price clamping and
direction of movement intraday to set a position
with a step from 8% to 22% intraday for a "big
player" managed to earn significantly (many times
increased position). I earned a lot, but still many
orders of magnitude less than it was possible. But,
one should realize that it is impossible to predict
everything, especially "super pumping by
collusion".

Mechanically memorizing variant movements

without really understanding what causes them
will make you poor and easily manipulated.
 "Double Bottom" or "W" pattern, signalling a
change from a bearish market to a bullish one. But
there is one fundamental difference from the
"Double Bottom" pattern.
A necessary condition for the Dragon formation is a
trend line drawn through the head and hump of this
model ("Dragon's Backbone").
It is important that this trend line is clearly visible
on the chart. The trend line plays an almost decisive
part in the figure.
"Dragon" and "Inverted Dragon" are quite common
on various price movement charts. With their help,
if they are correctly identified and you understand
CONTENTS: how they work, you can make a good profit on
various timeframes.
1) Description of the "Dragon" figure. The figure "Dragon" and its mirror reflection
"Inverted Dragon" is very similar to the "Double
2) Figure forming stages. Top" and "Double Bottom" figures, but they also
have significant differences, which will be
3) Additional signals that confirm the trend reversal described below.
and strengthen the workout of the "Dragon" pattern.
There are two types of this figure depending on
4) Figure forming and volume changes. the trend:

5) Setting targets for working with the figure. 1) "Dragon" - is formed in a downtrend and
signals a trend change to an uptrend;
Description of the "Dragon" 2) "Inverted Dragon" - is formed in an uptrend
figure. and signals a trend change to a downtrend.
The "Dragon" figure was named due to its
resemblance to a fairy-tale character: he also has a
head, two paws, a tail and a hump on his back.

"Dragon" is a reversal pattern that indicates almost

the very beginning of a trend reversal. The
formation of the "Dragon" tells the trader that the
mood on the market may soon change and the
current trend will reverse.
This figure is a more modified version of the
The Dragon figure consists of 5 parts which are movement, as a result of which two minimums "1st
formed in the following order: Paw" and "2nd Paw" successively appear on the
price chart.
1) Dragon's Head - price maximum from all parts
of the figure; The local minimum after the first support line
testing on the lower boundary of the figure forms
2) First Dragon's paw - local price minimum; "1st Dragon's Paw". After the second testing of
the same support level, the " 2nd Dragon's Paw"
3) Dragon's Hump - price maximum between its is formed. The difference between the minimums of
paws; the first and the second "paw" can range from a few
per cent to 5-10%.
4) Second Dragon's paw - another minimum
located slightly below/above its first paw, in rare A top (local maximum - correction of the
cases equal to the minimum of the first paw; downtrend) should be formed between the paws of
the "Dragon", which is called the "Dragon's Hump".
5) Dragon's Tail - is a target price that should bring In its essence, the formation of the combination
you a profit. "Head - Paw - Hump - Paw" is a reversal "Double
Bottom" pattern.

The end of the Dragon pattern formation is

indicated by the price closing above the "Dragon's
Backbone" - the trend line (resistance), drawn along
its points from the "Head" and "Hump". This will
be a signal of trend reversal. It is recommended to
wait until the candlestick, after the line crossing,
closes above the "Hump" level (price has
consolidated).

Additional signals that confirm

the trend reversal and
Figure forming stages. strengthen the workout of the
"Dragon" pattern.

"Dragon" is forming in a bearish market during a

downtrend. Its formation begins with the "Head".
It represents the local maximum. After the "Head"
formation, the market continues downward
1) The correlation of the length of the "dragon's grow in the direction of the uptrend and decrease in
paws" - if the "second paw" is longer, there is more the direction of the downtrend. This indicates that
confidence in the upcoming reversal. the trend is about to change.
Finally, an additional confirming signal can be an
2) When the level of the "second paw" matches increasing trading volume indicators, which occurs
with some important support/resistance level, when the price breaks through the descending trend
already tested in the past, it also strengthens the line (resistance) of the "Dragon" pattern. This is a
workout of the figure. breakdown of the trend line, which connects the
points of "Dragon's Head" and "Dragon's Hump".
3) Strong candles (large bodies with short Then the price growth in the direction of the
shadows) that went in the opposite direction after dragon's tail accompanied by a strong volume surge,
the "second paw" formation, thus increasing the which finally confirms the trend reversal.
probability of the current trend reversal. True price movements are always accompanied by
the growth of the volume indicator. It means that if
4) The longer the trend exists, the more likely its volume grows in the direction of the dragon's tail
ending. The Dragon pattern is often in the 5th (the future trend direction) and decreases in the
trend wave and in this case the reversal signal is direction of the previous trend, then the future trend
very strong. is definitely gaining strength and the "Dragon"
5) An additional confirming signal can be an figure is true.
increase in trading volume indicators, which should
increase when the price breaks through the Setting targets for working with
descending trend line of the Dragon pattern
(resistance). This is the line drawn from the upper the figure.
point of the "Dragon's Head" to the lower point of
the "Dragon's Hump".

Figure forming and volume

changes.

There are two options for entering the trade:

1) Entry when the "Dragon's Backbone" line of

the downtrend is broken (line - "Head"-
"Hump").
As the price moves from the head to the front paws,
the volume grows, confirming the downtrend that 2) Entry when the level of "Dragon's Hump" is
exists at that moment. But when the dragon's hump broken.
is formed, everything changes. Volume starts to
 It is at the level of the last maximum - the "Hump"
Let's take a look at each of them: level.
1 variant.
Entry when the downtrend line is broken. Second target.
At the level of the "Head".

Third target.
In rare cases it is the whole length of the previous
fall from the "Head" to the lowest "Paw". Then
from the point of the descending trend line breakout
("Dragon's Backbone") we set upwards this whole
length of the previous fall. It will be the last target
of the "Dragon's Tail".
Look at the chart above.

2nd option.
Entry at the breakthrough of the "Dragon's
Hump" level.
To reduce the risk of incorrect market entry, in case
of a fake break of the "Head - Hump" trend line,
you should wait until the candlestick closes above
this line.

The "Dragon" pattern in a downtrend, by a price

breaking through the trend line ("Dragon's
Backbone") and closing the candlestick above this
line gives a signal to open a buy position.

If you use a stop loss, it should be placed a bit

below the Dragon's Backbone line. Some traders
place it below the Dragon's Paw, it all depends on
your trading preferences and risk management.
Further, if the price is moving in your favour, it is
advisable to move the stop loss after the price The Dragon's Hump price level is a kind of support
movement, taking into consideration the volatility and resistance level. If it is broken, it means that the
of the instrument. uptrend that has started will continue for some time.
Sometimes it happens that you noticed the figure
The potential profit matches to the length of the not at the very beginning of the uptrend. If the
"Dragon's Tail". It's usually equal to the height uptrend keeps its strength, then breaking through
from the breakout point of the trend line to the the "Hump" level and fixing the price above it will
maximum point of the Dragon's Head. In other be a good signal to enter the deal. And it will allow
words, the entire length of the "Tail" is your you to earn on the following price movement.
potential profit. The potential profit is the distance from the
"Hump" level of the figure to the "Dragon's
Now we need to decide about our targets: Head" level or even higher (3rd target).
First target.
It is also important that if the price is trading in Description of the "Inverted
your favour, and according to the plan you should
have already fixed the profit, it is reasonable to Dragon" figure.
stay in the position while you get an additional
profit instead of the planned one. But you should
not forget about protecting your profit with stop-
loss or partial fixation.

There must be a strategy and a plan. At the same

time, your strategy and plan should be plastic to
market situations.
"The Upside Down Dragon is a reversal pattern that
indicates almost the very beginning of a trend
reversal. The formation of the " Inverted Dragon"
indicates that the mood in the market may soon
change and the current trend will reverse.
It is a modified version of the "Double Top" pattern,
and it signals a change from a bullish market to a
bearish one. But there is one fundamental difference
from the Double Top pattern.

A necessary condition for the formation of the

Dragon figure is a trend line drawn through the
head and hump of it ("Dragon's Backbone").

CONTENTS: It is important that this trend line should be clearly

visible on the chart. The trend line plays an almost
1) Description of the "Inverted Dragon" figure. decisive role in the figure.

2) Stages of the figure formation. "Inverted Dragon" and "Dragon" with the correct
identification and understanding of the work can
3) Additional signals that confirm the trend reversal bring a good profit on different timeframes.
and strengthen the workout of the "Inverted
Dragon" pattern. The "Inverted Dragon" and its mirror reflection
"Dragon" are very similar to the "Double Top" and
4) Setting targets for working with the figure. "Double Bottom", but they have significant
differences, which will be described below.
5) Examples of the "Dragon" figure on trading
instruments. There are two types of this figure depending on
the trend:
6) Examples of the "Inverted Dragon" figure on
trading instruments. 1) "Dragon" - is formed in a downtrend and
signals a trend change to an uptrend;

2) "Inverted Dragon" - formed in an uptrend and

signalling a trend change to a downtrend.

The " Inverted Dragon" / "Dragon" figures got their

name due to some resemblance to the fairy-tale
character: he also has a head, two paws, a tail and a
hump on his back.

Stages of the figure formation.

The " Inverted Dragon" figure consists of 5

parts that formed in the following order:

1) Dragon's Head - price minimum from all parts

of the figure;
"Inverted Dragon" is forming on an uptrend. Its
2) First dragon's paw - local maximum of the formation begins with the "Head". It represents a
price; local minimum. After the formation of the "Head",
the market continues the upward movement, as a
3) Dragon's Hump - price minimum between its result of which two maximums "1st Paw" and "2nd
paws; Paw" appears consecutively on the price chart. (Two
tops).
4) Second dragon's paw - another maximum
located a bit below/above its first paw, and in rare The local maximum of the first testing of the
cases equal to the maximum of the first paw; resistance line on the figure's upper boundary forms
the "1st dragon's paw". After retesting the same
5) Dragon's Tail - the target price that should bring resistance level, the "2nd dragon's paw" is
you a profit. forming. The difference between the maximums of
the first and the second "paw" can range from a few
per cent to 5-10%.

Between the dragon's paws a trough (bottom, local

minimum - correction of the upward movement)
should be formed, which is called "Dragon's
hump". In essence, the formation of the "Head -
Paw - Hump-Paw" combination is a "Double Top"
reversal pattern.
 ascending trend line (support) named "Dragon's
The end of the "Inverted Dragon" pattern formation backbone". This is the line drawn from the lower
is indicated by the price closing below the point of the Dragon's Head to the upper point of the
"Dragon's backbone" - the trend line (support), Dragon's Hump.
drawn along its "Head" and "Hump" points. This
will be a signal of trend reversal. It is recommended Setting targets for working with
to wait until the candlestick, will close below the
"Hump" level after crossing the line (price the figure.
consolidation).

Additional signals that confirm

the trend reversal and
strengthen the workout of the
"Inverted Dragon" pattern.
There are two options for entering the trade:

1) Entry when the "Dragon's Backbone" line of the

uptrend is broken (line - "Head"-"Hump").

2) Entry when the level of "Dragon's Hump" is

broken.

1 variant.
1) The correlation of the "Dragon's paws" Entering short position when the uptrend line is
length. If the "Second paw" is longer, then there is broken.
more confidence in the upcoming reversal.

2) When the level of the "second paw" matches

with some important support/resistance level,
which was already tested in the past, then this also
strengthens the workout of the pattern.

3) Strongly expressed candlesticks (large bodies

with short shadows) that went in the opposite
direction after the formation of the "second paw"
increase the probability of a current trend reversal.

4) The longer the trend exists, the more likely its

end.
In this case, we should open a deal for sale. We
5) An additional confirming signal can be an draw a line through the minimum point of the
increase in trading volume indicators, which should "Head" and the minimum point of the "Hump". The
increase during the price breakthrough of the signal is the crossing of this line when the price falls
below the minimum point of the hump. Also, if you Look at the graph above.
are in a long position, it will be a signal that you
should exit the long position. It is recommended to
use additional signals: you should wait for the
candle to close below the level of the "Dragon's
Backbone" line.
You can also use the volume indicators that will
become an additional confirming signal. They
should increase during the price breakout of the
ascending trend line - "Dragon's Backbone". It is a
breakout of the trend line, which connects the points
of "Dragon's Head" and "Dragon's Hump". And
then the price fall in the direction of the "Dragon's
tail" accompanied by a strong volume growth, thus
finally confirming the trend reversal. The Dragon's Hump price level is a kind of support
When working in short, we place a Stop Loss order and resistance level. When it is broken, it means
just above the highest "Paw of the inverted that the downtrend that has started will continue for
Dragon". some time. Sometimes it happens that you noticed
If we draw a grid of "Fibonacci lines" from the the figure not at the very beginning of the
minimum of the figure to the maximum, we can see downtrend. If the downtrend keeps its strength, then
that the level of the "Hump" is located between 38.2 breaking through the level of the "Hump" and fixing
and 50 Fibonacci levels. the price under it will be a good signal to enter a
The potential profit matches to the length of the short trade. This will allow you to take a profit from
"Dragon's Tail", which is usually equal to the the following price movement.
height from the point where the trend line is broken
to the lowest point of its "Head". In other words, the The potential profit is the distance from the
entire length of the "Tail" is your potential profit. "Hump" level of the figure to the "Dragon's
Head" level.
Now we need to set our targets:
It is also important that if the price is trading in
First target. your favour, and according to the plan you should
Located at the level of the last low - the level of the have already fixed the profit, it is reasonable to stay
"Hump". in the position while you get an additional profit
instead of the planned one. But, you should not
Second target. forget about protecting your profit with stop-loss
Located at the lowest point of the figure - the level or partial fixation.
of the "Head".
There must be a strategy and a plan. At the same
Third Target. time, your strategy and plan should be plastic to
In rare cases, it is the entire length of growth from market situations.
the "Head" to the upper "Paw". Then from the point
of breakdown of the ascending trend line ("Dragon's
Backbone") we put the whole length of the previous
price growth - this will be the last target of the
"Dragon's Tail".
 Examples of the "Dragon"
figure on trading instruments.
ETH / USD 1 day.

SPDR S/P 500 (SPY) 1 day

EUR / AUD 1 day

The chart shows how one figure passes into another

and all the targets are fully worked out.

The "Inverted dragon" figure. All description,

Examples of the "Inverted lines, targets on the chart are marked with yellow
Dragon" figure on trading colour.

instruments. The "Dragon" figure. All description, lines, targets

on the chart are marked with blue colour.
GBR / JPY 1 day
The most important thing in trading such figures is
the trend lines ("Dragon's backbone"). In this
example, the "Inverted dragon" has a rising
trendline in white colour. And the "Dragon" figure
has a descending trend line in purple colour.

Also trend breakout zones are very important

when trading and identifying patterns. In this
AAPL example they are marked with red circles.
 Description of the "Flag" figure.

The "Flag" pattern has two variations: " Bullish

Flag" and "Bearish Flag". They are one of the main
trend continuation figures in technical analysis.

Usually on the chart it resembles a parallelogram

CONTENTS: slanted against the previous trend. The flag is
1) Description of the "Flag" figure. considered to be a strong figure, so the trend break
on this figure is very rare. It is considered that the
2) Features of the "Flag" formation flagpole should be steep and its length should be
twice the width of the flag base.
3) Difference between "Flag", "Pennant" and
"Rectangle" figures Sometimes it is allowed that the "Flag" has a
horizontal position of the " canvas" (the main thing
4) Difference in working out the targets of "Flag", is that the figure has a flagpole, otherwise it will be
"Pennant" and "Rectangle". a figure "Rectangle", but in this case the strength of
the signal when the figure breaks through in the
5) "Bullish Flag". direction of the previous trend will be average. If on
a horizontal "Flag" the breakout occurs in the
6) "Bearish Flag". direction opposite to the previous trend, it will be a
weak signal and in this situation it is not
7) Flag - trading options. Targets. recommended to trade against the main trend.
- 1 option. Trade for the distance of the height of the
flagpole. Usually, the "Flag" occurs in the middle of the trend
- 2 option. Trading for the distance of the height movement, so as a rule, after the breakout of the
(width) of the "Flag". figure, the price passes the distance equal to the
price movement before the formation of the figure.
8) Trading volume and "Flag" forming. The distance of the price movement after the
breakout of the pattern is usually equal to the
9) Examples of the "Flag" figure (bullish / bearish) distance of the flagpole (the distance which price
on trading instruments. has passed before the formation of the pattern).
This figure can be formed during both ascending
(bullish) and descending (bearish) trends. Its
appearance is unavoidable in almost any falling or
rising market.
Interesting that this pattern can occur several times the trend movement.
within the same time frame. When it appears, it
means that the trend movement will continue in the 7) "Flag" is a quite strong and stable figure, for
same direction as before. This happens very often which the trend break is not typical. (trend
on a descending trend when there is a " dump " with break happens on fully manipulative
a temporary price hold. The "flag" is forming faster instruments with small capitalisation, for
in a "bearish market". understandable reasons).

Features of the "Flag" Difference between "Flag",

formation "Pennant" and "Rectangle"
figures

1) The appearance of the figure is followed by a

sharp price movement in the form of an almost
straight line, and accompanied by a large volume
of trading.

2) The "flagpole" of the flag should be raised

sharply and its length should be about two
widths of the base of the "flag canvas".
By the character of forming "Flag" and "Pennant"
2) During the formation of the figure, the volume are very similar. They are formed after a rapid
values gradually decrease. previous trend and have a "flagpole". This is the
main thing that unites them. They differ from each
3) Most often "Flags" are formed near the other only in the form of the "central part of the
middle of the price movement. As a consequence, figure - the "canvas". The "canvas" of the figure
after a breakout, the price needs to pass the same "Pennant" looks like a symmetrical triangle.
distance as before the formation of this figure.
The "canvas" of the "Flag" figure looks like a
4) A flag is forming during both an uptrend and parallelogram. They have the same target workout -
a downtrend. by the height of the "flagpole".

5) " Flag" is forming much faster during a Both figures are forming in the middle of the trend
bearish market. movement. The difference is in the forming of the
shape of the figure's "canvas". In the "Flag" figure
6) A "Flag" looks very similar to a small the support and resistance lines are parallel and they
parallelogram angled in the direction opposite to resemble a trend channel (but short) located at an
angle to the opposite direction of the trend.
Sometimes the "canvas" of the flag is horizontal and
thus resembles a "rectangle" figure. But the main
feature of the "Flag" is the presence of a "flagpole".
It is not available for the "Rectangle" figure.

The difference between the "Flag" and the

"Rectangle" is that the rectangle does not have a
"flagpole". This is very important to understand in
trading these figures. Working out the targets of
"Flag" and "Rectangle" is absolutely different, that's
why it is so important to identify exactly what
figure is being formed.

Difference in working out the Here's a checklist of what to watch out for to
targets of "Flag", "Pennant" make a trade based on a bullish flag:

and "Rectangle" 1) Price is rising rapidly with increased volume.

The preferable catalyst is news or a big event
"Flag" - target setting by the height of the upcoming.
"flagpole".
2) Price consolidates at or near a top and makes a
"Pennant" - target setting by the height of the clear pullback.
"flagpole".
3) You should buy when the price breaks the
"Rectangle" - target setting by the height of the consolidation pattern upwards with high volume.
"canvas" of the figure.
4) Stop order is placed below the bottom of the
"Bullish Flag". consolidation pattern ("flag canvas").

A very important thing to pay attention to when

trading the Bullish Flag is volume. Volume
confirms large movements and increases the
probability that the breakout will be successful.
The second thing to look for is the forming of a
downtrend line that must be broken (the "figure
canvas" resistance). It will be the upper boundary of
the flag. As a rule, after its breakout, the price goes
In simple terms, a "Flag" that forms on a strong upwards rapidly.
uptrend is called a "Bullish Flag". It is called a flag
Also it should be noted that the number of large
because it resembles a flag on a flagpole, and a
bullish flag because it occurs in a rising trend. waves in the consolidation ("canvas" of the figure)
Trading a bullish flag is quite simple. The most can be various, there are no clear rules.
The " Bullish Flag" figure, when traded correctly,
difficult thing in trading this formation is to find it
does gives good opportunities. But if it does not
in time.
work, you need to know where to exit the deal.
More precisely: you need to exit at the point of the
chart where the trader realises that this formation is
no longer working.

The most popular way to put STOP LOSS is below

the consolidation zone (under the "canvas" of the
figure). If the price goes below this zone, it is
logically clear that the " Bullish Flag" pattern will
not be formed. This is the point at which it will
become obvious that the formation has not worked,
and it is time to exit, having fixed the loss.

There must be a strategy and a plan. At the same

time, your strategy and plan should be flexible to
market situations.
The key to trading flags is to monitor volumes.
When volumes rise during the breakout, it is usually
time to enter a short position.
"Bearish Flag".
Flag - trading options. Targets.

The Bearish Flag is identical to the Bullish Flag

with the only difference that the trend in this case is 1st option.
downwards. The Bearish Flag is a mirror reflection Trade for the distance of the height of the
of the Bullish Flag. A Bearish Flag is formed on a flagpole.
descending Bearish trend. That's the reason for the
name. After a sharp downward movement with First of all, we find the "Flag" pattern on the chart
increased volumes, a small pullback follows and draw parallel support and resistance lines. Since
(Formation of the "flag canvas"), after which the in our example our trend is bullish, the price is
trend continues. During the formation of the likely to break upwards.
"canvas" of the figure, we need to find this
formation and identify it.
Then we need to decide about our targets. The target
will be the height of the main part of the flagpole.
This way of working is designed to maximise profit
from market movements. It is better to close not at
100% of the planned movement, but at 80%. It is
This way of work is designed to profit from the
better to exit before other traders so that you have
main trend movement after the breakout of the
enough liquidity, especially for coins with small
figure. Why did I gave an example of another one
capitalisation and not large trading volume.
variant of trading this figure? It is simple, very often
On the "Bearish Flag" the target is calculated in a
the figure does not work completely for the full
similar way, but in a mirror reflection. Let's look at
length of the flagpole at weak trend movements.
the figure below.
It is also important that if the price is trading in
your favour, and according to the plan you should
have already fixed the profit, it is reasonable to stay
in the position while you get an additional profit
instead of the planned one. But, do not forget about
protecting your profit with a stop loss or partial
fixation.
Always protect your profits! Don't let profits turn
into losses. A compound % does wonders with the
right approach.

There must be a strategy and a plan. At the same

time, your strategy and plan should be flexible to
market situations.

2nd option.
Trading for the distance of the height (width) of
the "Flag".
 Trading volume and "Flag"
NEO / USD 1 hour. "Bearish Flag.
forming.

The flag was formed 2 times in a row in the

direction of the downtrend. Pay attention to the
trading volume during the formation of the figure.
The "Flag" formation and volume indicators are
closely connected.
XLM/BTC 4 hours. “Bearish flag”
It usually happens as follows:
1) The flagpole forming in a fast market is
accompanied by an increased volume indicator.
Panic buy or panic sell pushes the price up/down
quickly by impulse.

2) During the further formation of the pattern,

volume indicators are gradually falling. There is
a process of correction (price consolidation within
trends), and no market participant will ever go
against the main trend. For this reason, the "Flag" Here is a different situation. Someone dumped a
usually tilts to the opposite direction of the main very large volume on the market instantly. Thus
trend. But it usually does not last long. collapsing the price. The market maker quickly
bought back a part of it and started to hold the price,
3) At the moment when the figure is broken, the a flag started to form, but because all traders see the
volume indicators increase sharply, which squeeze, they start to sell their positions to the
indicates the continuation of the previous trend. maximum. In this situation there is no uncertainty
An impulse occurs and the trend continues. among traders, everyone understands that the price
The fundamental aspect of flag trading is to monitor will go down soon. Consequently, we see increased
volumes. When volumes rise on a breakout, it is volume inside the flag formation. It is always
usually time to enter a position. necessary not just to look at the chart, but to
understand why it is so.
If, during the formation of a pattern, volume
indicators increase in the direction of the trend and Mechanically learning movement variations
fall when moving against the trend, it is a good without really understanding what causes them
signal that the price will break the pattern in the will make you poor and easily controllable.
direction of the main trend.
 XEM / USD 1 day

Examples of the "Flag" figure

(bullish / bearish)
XRP / USD 1 hour.

Continuation on the same instrument. As we can see

the price moves from a strong support level to a
strong resistance level. This is very important to
understand when setting targets for a certain pattern.
In this case it's "Descending Flag". This allows you
Here we can see the target working out according to to understand where the price is likely to stop when
the second variant of target setting with a weak rising and falling.
trend movement in the bullish market. That is why it is so important to take into
consideration other factors that can affect the price,
in this example local support and resistance levels.
The first variant of target taking is actual at strong
trend movements, the second variant at weaker
trend movements. You need not just to know the rules of technical
analysis, but to understand what and how and why
it works.
XEM / USD 1 day

LTC / USD 1 day

In this example, we can see a "Bearish flag" after a

pump. In this example we can clearly see why it is Here is a very good example of "Descending Flag"
necessary to get out of the position 80% of the working out sandwiched between strong levels. The
movement before the strong support. "Flag" working out clearly by the height of the
"flagpole" -27%.

Also we can see here on this example before the

"Flag" formation during the formation of the
"Descending triangle" that it will be broken down
and the price will stop temporary at the lower point market. The crowd acts as a united programmed
of the "Flag" (strong previous local level), and then organism. Be smarter.
with a high probability will move lower to work out
the target of the "Descending triangle" -66%. On
this example I have shown a lot of factors to pay A well-managed crowd works like one semi-
attention to. Which give a clear picture of the future minded person.
movement.

By the way, pay attention, before the 1000% dump

Stay flexible and smart, calculate all your own and there was a descending wedge which should have
other people's options forward worked out at +67% at maximum! But we saw the
exit from the wedge and the 1000% dump. This is a
huge mistake of technical analysis rules. Can you
Another sign that the "descending triangle" will be imagine the "feeling of lost profit" of traders who
broken down is the volume behaviour inside the blindly worked by book-learned rules without any
"canvas" of the triangle formation. Volume output plasticity? A 10X mistake. Believe me, I have
near the support at minimum price values. This experienced this several times on other instruments
signalled that a major player is dumping the back in the day. I came out +300% and the tool
position and the support will not be able to hold. It went to 8000%. Why does it even happen and why
is only a question of time when there will be a did it happen on this coin?
downward breakout. Another signal to go down is a
descending trend and permanent decreasing of price
"highs" (formation of a "descending triangle"). There must be a strategy and a plan. Meanwhile,
your strategy and plan should be malleable from
MATIC / BTC 1 day market situations.

Why did this happen on the MATIC coin? It's quite

simple. MATIC has a low capitalisation. Due to
small capitalisation it is possible to boost the price
moving well. It is due to the complete control of the
price by the market makers of the instrument or
large traders in conspiracy, who act as market
makers of this instrument.

As we can see, the flag worked out to short instead

of -22% by 46%. The question is why? It's quite
simple, it's a dump after a pump up by 960%! That's When a minority needs to, the rules of technical
why the flag worked on two flagpoles! That's why analysis stops working.
you have to work according to the situation, but not
according to the rules of the book! You need to
understand what is happening with one or another
instrument. Most TA books are written for crowd
control. The more educated society by the rules of
technical analysis the better TA works on the
 through the lowest point of the hollow after the first
peak. The support, resistance and target lines are
parallel to each other. The resistance line passes
through the peaks of the tops.

The reliability of the Double Top when confirming

the reversal of a bullish trend to a bearish trend
depends on the duration of the period during which
the figure was formed. In other words, on a minute
chart, the figure will give much more fake signals
than on a daily or weekly chart.

An important factor promoting the occurrence of

the Double Top is a strong resistance level. After
CONTENTS: hitting it, the price wave starts its first outflow. In
this way, the first peak of the model occurs. Then,
1) Description of the "Double top" figure. having pushed away from the support line, the price
goes up again reaching the resistance line and then
2) Features that should be paid attention to when goes down. Trading volumes at the peaks are
forming this model of the figure. increasing.
3) Setting targets for working with the figure.
In any case, a reliable signal can be got only when
4) Forming the figure and volume changes. the support line is broken.

5) Examples of the "Double top" figure on trading The Triple Top pattern is also sometimes met, it is a
instruments. similar pattern, but it appears on the chart much less
often.
Description of the "Double top"
figure. Features that should be paid
attention to when forming this
model of the figure.

Double top is one of the most common reversal

patterns that occur at the end of an uptrend. Double
top is a reversal figure in technical analysis and
signals a possible turn from an uptrend to a
downtrend. The Double Top pattern consists of two
tops, a support line (neck) and a resistance line 1) The Double Top pattern should be preceded by a
(peaks of the tops). The support line should pass pronounced uptrend. The longer its duration, the
more reliable will be the signal for a pattern
formation.

2) The first top is usually the highest point of a Breaking through the support level (neck)
bullish trend, and the new high then becomes a should be accompanied by a significant trading
resistance level. Reaching a new high is not volume increase. It is also important that the price
uncommon, so at this moment it is too early to talk does not only break the support level, but also fixes
about a possible reversal. An important point that a below it.
trader should pay attention to is the trading volume.
Which should increase significantly during the first It is necessary to understand that the breakout of the
top. support level must be significant. Otherwise, there
is no enough reasons to deduce a trend reversal,
3) The trough is forming after the first top on a because a Double Top may become a fake one.
pullback, at which the price decline should be
accompanied by a trading volume decreasing. The 7) To determine the target, you should measure the
price minimum, which will be reached as a result of distance from resistance (the maximum point of
the decline, becomes the support level (neck). The the Double Top) to support level (Target) and
price fall by 10% or more from the maximum of the then carry it downwards from the breakout point. It
first top allows to assume about significant growth is illustrated in the figure below.
of "bear's" pressure on the market. If the decline
was less than 10%, it is too early to assume about a Setting targets for working with
significant weakening of the buying demand. The
shape of the trough can also inform about the the figure.
weakening of the buying demand. If the market
movement will be lateral and accompanied by the
decrease in the trading volume, it is an additional
confirmation of the buying demand weakening.

4) A second top is forming after the trough, and

this should be accompanied by trading volume
growth. The classic double top assumes that both
peaks will be almost identical in height, but in
practice one of them in most cases can be higher or
lower than the other within a few percents. It should I would like to clarify the moment of entry into the
be realised that the market shows perfect figures deal. In most cases, traders use two methods -
(which are shown in TA books) very rarely. breakout trade, or trade on the pullback.

5) Price decline after the second top should be 1) In first option, the trader enters the market
accompanied by trading volume increase. However, immediately after breaking through the support. A
the confirmation of the figure occurs only after stop-loss can be set a bit above the level. It is not
breaking the support line (neck). recommended to set the stop-loss very far from the
entry point.
6) Once the support line is broken, it becomes a
resistance line. The trader should remember the 2) While trading on a pullback you should not react
following rule: to the breakdown and following descending price
movement. It is reasonable to enter the trade when
the asset returns to the support level and thus
confirms it as a resistance. This method is called
"Never open a position against trend unless there trading the first pullback.
is no proof of a trend reversal."
 Forming the figure and volume
changes.

It is up to you to decide which way of entering a

trade is better. As an option, you can practice on a
short time frame inside the day for symbolic money
using two types of entries into deals. For example,
you split your trading deposit into 2 parts of 100$
One part you trade a pullback, the other part,
therefore, a breakout. You can organise a
competition with yourself for a week. Write down
all trades (profitable and losing) in a notebook. It is
important to work with small amounts and without
excitement, only cold calculation. What method you
find more profitable and understandable, you should
use in your daily trading.

You need to understand that it is all individually.

Some traders are better at trading a breakout, so the
profit covers all the knocked out stop losses. For
another trader it is more acceptable to trade a
conservative pullback with less risk, but also less
potential profit. As a rule, the larger traders' deposit
is, the more calm trading is.

It is also important that if the price is trading in

your favour, and according to the plan you should
have already fixed the profit, it is reasonable to stay
in the position while you get an additional profit
instead of the planned one. But, you should not
Generally, the trading volume decreases as the
forget about protecting your profit with stop-loss
figure is forming. Price decrease after the second
or partial fixation.
top should be accompanied by trading volume
Always protect your profits! Don't let profits turn
increase. Breakout of the support level (neck)
into losses. A compound percent does wonders with
should be accompanied by a significant trading
the right approach.
volume increase.
There must be a strategy and a plan. At the same
time, your strategy and plan should be plastic to
market situations.
 Examples of the "Double top" formation was described above. We can say that the
first variant worked according to all TA rules.
figure on trading instruments. In the second variant everything is much more
interesting. After the first model the price increased
by almost 100%. In this case it was more logical for
BTC/USD 1 day
the crowd to think that the second model would
work according to all TA rules. But pay attention to
the correlation between volume and price chart in
the first model variant and second one. As we can
see the difference is significant.

In the second variant the price decrease after the

formation of the second peak was not accompanied
by volume increase, which indicated that there were
not many sellers. Then the price stopped at the neck
level of this figure (support), the flat period of about
a week began. The struggle of sellers and buyers. At
such moments it is necessary to be out of the market
As we can see in this example, the target worked and watch who is going to win. It is better to enter
perfectly according to the percentages. We can see the deal not at the best prices, but being confident in
that the target worked out exactly according to TA your deal, than to buy according to luck. Finally the
textbooks and made a squeeze. It is very important bulls won and the coin after +100% gave another
to keep the crowd's faith in the sacredness of +60%.
technical analysis. It is usually done at moments
that are not particularly significant for the market. Be less greedy of the rest and as a consequence
More details in the article Market Maker and Price you will be richer of the rest.
Management.

ETH / USD 1 day

A clear example of two completely different

variants on one chart of ethereum to dollar. Don't
think that everything is so simple. To make money,
you need to fool the crowd. In the first variant, the CONTENTS:
pattern worked according to all TA rules, missing
the book targets by only 2%. That's why I always 1) Description of the "Double Bottom" figure.
exit about 80% of the way from the generally set
rules. Volume confirms all movements on the chart. 2) Features that should be paid attention to.

The correlation between volume and pattern 3) Setting targets when working with the figure.
4) Non-horizontal "Double Bottom". parallel to each other. The support line crosses the
first and second "bottom". See below for a clear
5) Fight against fake signals. illustration.

6) Figure forming and volume changes.

Features that should be paid
7) Examples of the "Double Bottom" figure on attention to.
trading instruments.

Description of the "Double

Bottom" figure.

Double bottom is one of the commonly used 1) Since this is a reversal pattern that changes a
technical analysis patterns and has proved to be a downtrend into an uptrend, a downtrend is
quite profitable pattern if you work with it correctly. necessary before the Double Bottom.
This pattern is often found on charts on different
timeframes. This pattern looks like the English 2) The first bottom is the local minimum and the
letter "W". lowest point on the current trend. The first bottom is
used to mark the first point of the support line.
The occurrence of this pattern means that the
downtrend is coming to its end. This signal 3) The pullback after the 1st bottom is usually
indicates that the buyers' pressure is strong and the +10-20% of the First Bottom price. The highest
sellers are losing their positions. The double bottom point of the pullback usually becomes the resistance
pattern is a reversal pattern. It is a reversal of a line.
downtrend to an uptrend.
4) The second bottom is forming after a pullback
The "Triple bottom" model is also sometimes and is usually accompanied by low trading volume.
encountered. This is a similar pattern, but it occurs Usually, the second bottom confirms the support
on the chart much less often. Double Bottom and line at the same level as the first bottom, but slight
Triple Bottom are reversal patterns that appear at deviations are possible. The depths of the 1st and
the base of a downtrend and signal its possible 2nd bottoms do not necessarily have to be the same
change to an uptrend. and parallel.

The "Double Bottom" pattern, consists of two 5) Price growth after the second bottom should be
waves directed downwards (two "Bottoms"), a accompanied by increased trading volume.
support line passing through the "bottom of the
wave" and the "Neck" line (resistance line) The 6) Resistance line crossing from below to upwards
"Neck" line should pass through the top of the is a full completion and confirmation of the
correction following the first bottom. "Double Bottom" pattern. As a rule, the crossing is
accompanied by increased trading volume and
The Support, Resistance and Target lines should be strong price growth.
7) Turning resistance into support after
confirmation of the "Double Bottom" pattern.

Setting targets when working

with the figure.

It is up to you to decide which way of entering a

trade is better. As an option, you can practice on a
short time frame inside the day for symbolic money
I would like to clarify the moment of deal entering. using two types of entries into deals. For example,
In most cases, traders use two methods - trading a you split your trading deposit into 2 parts of 100$
breakout or a pullback. One part you trade a pullback, the other part,
therefore, a breakout. You can organise a
1) In the first option, a trader enters the market right competition with yourself for a week. Write down
after resistance breakout. A stop loss can be placed all trades (profitable and losing) in a notebook. It is
a bit below the level. It is not recommended to place important to work with small amounts and without
a stop-loss very far from the entry point. excitement, only cold calculation. What method you
find more profitable and understandable, you should
2) When trading on the pullback, you should stay use in your daily trading.
away from entering the market during the breakout
and the following price ascent. It is reasonable to You need to understand that it is all individually.
enter the market when the asset returns to the Some traders are better at trading a breakout, so the
resistance level, as a result of which it will confirm profit covers all the knocked out stop losses. For
the level as support. This method is called trading another trader it is more acceptable to trade a
the first pullback. conservative pullback with less risk, but also less
potential profit. As a rule, the larger traders' deposit
3) There is also a third option of entering. It is entry is, the more calm trading is.
from the support of the "Double Bottom" figure in
case of its confirmation. As you can guess, the entry It is also important that if the price is trading in
should be made before the full formation of this your favour, and according to the plan you should
figure. I use this option in most cases. It is the most have already fixed the profit, it is reasonable to stay
profitable in my opinion. Risks in comparison with in the position while you get an additional profit
profit are minimal. instead of the planned one. But, you should not
forget about protecting your profit with stop-loss
or partial fixation.

There must be a strategy and a plan. At the same

time, your strategy and plan should be plastic to
market situations.
 Non-horizontal "Double This figure sometimes gives fake signals. In order
not to get caught in this trap and not to be knocked
Bottom". out by stop loss, it is recommended to enter a
position not on the breakout of the resistance line,
but on the pullback after the breakout, if the new
support is confirmed. (resistance becomes support).
I have demonstrated it in the pictures above.

Figure forming and volume

changes.

Ideally in the Double Bottom pattern, the troughs

are at the same level, but in most cases on the
charts, the second trough may be slightly below or
above the first. In this case, the support line and
resistance line will not be horizontal. Nevertheless,
all the properties and principles of target setting for
this pattern are the same. Look at the figure below
for a clear illustration.

Fight against fake signals.

In an ideal Double Bottom pattern, there should be
lower volume values at the peak of the second
bottom than during the formation of the peak of the
first bottom, but it is in an ideal case and when the
trend is strong. In many cases, the volume does not
differ significantly before the resistance is broken.
When the resistance has been broken and
consolidated, and everyone has noticed it, this is the
time when the "panic buy" and a significant
increase in volume starts.
 Examples of the "Double IOTA / BTC 1 day.

Bottom" figure on trading

instruments.
ETH / USD 1 day

There is a double upside signal on this trading pair.

ADA / BTC 1 day

We can see a perfect pattern working out by a single

candlestick. Panic Buy. The volume changed
significantly only after the resistance line ("Neck")
was broken.

BTC / USD 1 day

The example of the ADA coin is a more complex

version of the figure identification and volume
correlation. As we can see here is not a book
variant. The first and second bottoms are different
in depth. Their volume is almost the same, so after
the second bottom the flat started, because most of
traders doubted that it was the culminating sales.
The second bottom was formed almost 2 weeks and
the price was flat. Buyers and sellers were in doubt.
The forces were balanced.

The break of the downtrend (purple line) is very

important here. It was exactly the break of the
On this example we can see different depths of the downtrend line and fixation above it that gave a
1st and 2nd bottom. The target worked out just like signal for growth. The trading volume started to
in the book. But if I would use 2 squeezes on the grow only when the price consolidated above the
first and second bottom as a basis for the target purple trend line. The highest volume we can see at
setting, the figure would not work. the breakout of the neckline. The target worked out
exactly right.
In this example we can see another failure to work
out the double bottom pattern, although all the
prerequisites for working out were there.

That is why I repeat once again that besides TA

analysis (for everyone) you should use other
methods of analysis to understand further price
movement. Even adequate logic and knowledge
of psychology are much more important in real
trading than tons of read theoretical textbooks
on TA. It is very important to know what the
crowd believes in, because they should give you
money by following their faith.
 The "Triple Top" pattern consists of three tops, a
support line ("Necks") and a resistance line (peaks
of the Tops). The support line should pass through
the lowest point of the trough following the first
top. The support, resistance and target lines are
parallel to each other. They can have a slope to any
direction. It is very rare to find perfectly horizontal
support and resistance lines in this figure. The
resistance line passes through the peaks of the
"Tops".

It is a figure of strong trends. For example, in the

cryptocurrency market with the "Pump" manner of
assets movement, this pattern unlike the "Double
Top" is rare. On forex and stocks, the "Triple Top"
is more common guest on charts.

This figure is often associated with the "Head and

Shoulders" figure, but there is a difference between
them. In the "Triple Top" figure, the heights of all
CONTENTS:
three peaks are at the resistance line and are about
1) Description of the "Triple Top" figure. equal. In the "Head and Shoulders" figure, the 2nd
peak is significantly higher than the others.
2) Features that should be paid attention to during
the formation of this figure. The formation of the Triple Top pattern usually
follows the next steps:
3) Setting targets for working with the figure.
On a strong uptrend, the price sets a new high.
4) Figure forming and volume changes. Then, on a pullback from the support line, the price
rises again and, after reaching the resistance line
5) Examples of the "Triple Top" figure on trading
goes down. Trading volumes increase while the
instruments.
price reaches the tops. After three tries to rise, the
price cannot break through the resistance level and
then falls.
Description of the "Triple Top"
The "Triple Top", as well as the "Double Top", are
figure reversal patterns and they appear at the top of an
uptrend, signaling its possible transition to a
downtrend. "Triple top" appears on the charts much
less often than "Double top". These figures of
technical analysis gives a high percentage of precise
signals for a trend reverse. The main thing to pay
attention to when looking for the "Triple Top" and
"Double Top" patterns is the search for a strong
uptrend. Anyway it will change its direction, there
Triple Top - is one of the main classic figures of is only a question of time. Those who earn money
technical analysis, which reverses the uptrend. know how to wait.
The figure is common for different timeframes: confirms the reliability of the figure even more.
from intraday to weekly. The reliability of the Breaking through the support (neck) level
"Triple Top" in confirming the reversal of a bullish should be accompanied by a significant trading
trend to a bearish one depends on the length of time volume increase. But there can also be a fake
over which the figure was formed. In other words, breakout through the support level, and you should
on a minute chart, the figure will give much more be ready for it. It is important that the price should
fake signals than on a daily or weekly chart. not just break through the support level, but also
consolidate below it.

It is necessary to realize that the support level

Features that should be paid breakout must be significant. Otherwise, there are
not enough reasons to make any conclusions about
attention to during the the trend reversal, since the "Triple Top" may turn
formation of this figure out to be fake.

6) To determine the price movement target, measure

the distance from resistance (maximum point of
the Triple Top) to the lower support level
(target) and then move it downwards from the
breakout point. It is clearly shown in the figure
below.

Setting targets for working with

the figure
1) An uptrend is necessary for the formation of the
Triple Top. The longer its duration, the more
reliable the signal for the formation of this pattern
will be.

2) Three tops must form a clear resistance line. As

a rule, they are at the same resistance level.
Between the peaks there should be clear bottoms,
which form a clear line of support. There may be
closed squeezes (shadows) on the support.

3) As a rule, the trading volume decreases as the

pattern is formed, but the trading volume may
increase at the peaks. The volume is smaller with
each following top.
I would like to clarify the moment of entry into the
4) Confirmation of the pattern occurs only after the
deal. In most cases, traders use two methods -
support (neck) line is broken. breakout trade, or trade on the pullback.
5) After the support is broken through, it 1) In first option, the trader enters the market
becomes resistance and thus the "Triple Top" immediately after breaking through the support. A
pattern is confirmed. The price may return and stop-loss can be set a bit above the level. It is not
make a pullback from the new resistance, which recommended to set the stop-loss very far from the
entry point. or partial fixation.
2) While trading on a pullback you should not react Always protect your profits! Don't let profits turn
to the breakdown and following descending price into losses. A compound percent does wonders with
movement. It is reasonable to enter the trade when the right approach.
the asset returns to the support level and thus There must be a strategy and a plan. At the same
confirms it as a resistance. This method is called time, your strategy and plan should be flexible to
trading the first pullback. market situations.

Figure forming and volume

changes

It is up to you to decide which way of entering a

trade is better. As an option, you can practice on a
short time frame inside the day for symbolic money
using two types of entries into deals. For example,
you split your trading deposit into 2 parts of 100$
One part you trade a pullback, the other part,
therefore, a breakout. You can organise a
competition with yourself for a week. Write down
all trades (profitable and losing) in a notebook. It is
important to work with small amounts and without
excitement, only cold calculation. What method you
find more profitable and understandable, you should
use in your daily trading.
You need to understand that it is all individually.
Some traders are better at trading a breakout, so the
profit covers all the knocked out stop losses. For
another trader it is more acceptable to trade a
conservative pullback with less risk, but also less
potential profit. As a rule, the larger traders' deposit
is, the more calm trading is.
It is also important that if the price is trading in As a rule, the trading volume decreases as the
your favour, and according to the plan you should figure is forming. But its growth is possible at
have already fixed the profit, it is reasonable to stay peaks. The volume decreases with every peak.
in the position while you get an additional profit Breaking through the support level (neck)
instead of the planned one. But, you should not should be accompanied by a significant trading
forget about protecting your profit with stop-loss
volume increase. AUD / USD 1 day

Examples of the "Triple Top"

figure

XRP / USD 1 day

On AUD we can see a classic variation of the figure

with a horizontal support line, equal in height tops
and as a consequence a perfect horizontal resistance
line. This kind of situation is rare in the
cryptocurrency market. Pay attention to the volume
indicator and price movements on the chart at the
end of the figure formation. The huge volume
surges occurred before the breakout of the pattern,
On the chart we can observe a small angle of thus deliberately demonstrating that the level was
inclination of the support line ("Neck"). The tops held. Then the price moved upwards and those who
have different heights due to the shadows. I set the believed in it were fooled. It was all done
resistance line parallel to the support line in these deliberately to fool the crowd and gain a profit from
cases and completely reduce the height of them.
shadows where slippage of the price has occurred. I
consider only full candles where the price has been
standing for some time, but was not caught by Be less greedy than others and as a consequence
slippage for minutes or even seconds. XRP is you will be richer than others.
mostly considered to be a pump coin and makes
moves by multiple candlesticks by a lot of %. There
have always been a lot of squeezes (shadows) on
this coin, both up and down.

The target worked out as it is according to the

technique of this figure (at -21%). Even a couple of
percent lower. Then a symmetrical 50/50 triangle
was formed, which was broken through downward.
 how to surprise.

It is worth to note that this is a rare pattern. The

"Triple Bottom" pattern has the form of three
consecutive latin letters "V". On the chart it is
formed by three minima between which there are
peaks. This figure is a mirror image of the "Triple
Top" pattern and resembles the "Inverted Head and
Shoulders" pattern.

The Triple Bottom pattern is very similar in nature

to the Double Bottom pattern, but differs from it
only by the fact that the Triple Bottom has another
minima. The Triple Bottom can be formed only
after a downtrend and before an uptrend.

This pattern is bullish, which in technical analysis

CONTENTS: stands as an indicator of trend reversal from
1) Description of the "Triple Bottom" figure. downtrend to uptrend. "Double Bottom" is more
common on charts than "Triple Bottom".
2) Features that should be paid attention to when
forming this figure. Both Double Bottom and Triple Bottom are reversal
patterns that appear at the base of a downtrend and
3) Setting targets when working with the figure. signal its possible transition to an uptrend. These
patterns are reversed representations of the Double
4) Figure forming and volume changes.
Top and Triple Top patterns.
5) Examples of the "Triple Bottom" figure on
trading instruments. Features that should be paid
attention to during the
formation of this figure
Description of the "Triple
Bottom" figure

Triple bottom is a reversal figure, which consists

of three minimums, the depth of which is about 1) The trend should be downward.
equal. But sometimes there are patterns (especially
with squeezes) where their depth is far from equal. 2) Three bottoms should be formed, with their
So all this is just conditional. The market knows minima and tops being practically at the same level,
along which support and resistance lines can be Setting targets for working with
drawn. There may be deviations, but not significant.
the figure
3) The most important condition is pullbacks (or
recoveries) from the lows. They should be at least
80% of the previous downward movement

4) Trading volume - decreases with each new

bottom. On the third day, the trading volume is at its
lowest. No one wants to sell. This will tell you that
an upward reversal trend is likely to occur. You will
notice how the price recovery on pullbacks is
accompanied by an increase in trading activity. This
indicates an increase in demand.

5) The most important moment of formation of this

figure is the crossing of the resistance line by the
price. Here we would like to clarify the moment of
entering a deal. In most cases, traders use two ways
6) To get the final confirmation of the formation of
- either trading the breakout, or on the pullback
the figure, it is necessary that the resistance line is
broken from bottom to top, after which a decisive 1) In the first variant, the trader enters the market
price growth begins. Only then we can say that the immediately after the resistance is broken. A stop
"Triple Bottom" pattern is complete, after the loss can be placed slightly below the level. It is
resistance level ("neck") is broken upwards. This undesirable to put stop loss very far from the entry
indicates that the market is under the control of the point.
bulls and an upward bullish trend is expected.
2) When trading on a pullback, one should react
7) In order not to make a mistake when determining with restraint to the breakout and subsequent
the triple bottom, one should follow the trading upward price movement. It is advisable to enter the
volume and the resistance crossing after the third market when the asset returns to the resistance
bottom. level, as a result of which it will confirm it as
support. This method is called trading the first
8) Resistance becomes support after the Triple
pullback.
Bottom is confirmed.

9) The target for working out the pattern is the

difference between support and resistance
summarized to the price at resistance (details of
targets in the figure below).
What is the best way to enter a deal is up to you. As Figure forming and volume
an option, you can practice on a small time frame
within the day for example a week for symbolic changes
amounts of two types of entries into transactions.
For example, you divide the trading depot in 2 by
100$ One part trades the pullback, the other part,
therefore, the breakdown.

You organize a competition with yourself for a

week. Write down all the plus and minus trades in a
notebook. It is important to work in small amounts
and without excitement, only cold calculation.

Whichever method is more profitable and

understandable for you, that is the one you should
use in your daily trading. It should be understood
that this is a purely individual approach. Some Trading volume - decreases with each new bottom.
traders have a better hand and "flair" for breakout On the third day the trading volume is the lowest.
trading, the profit covers all the knocked out stop The reason is clear - no one wants to sell, most
losses. For another trader it is more acceptable to traders realize that there will be an upward trend
trade a conservative pullback with less risk, but less reversal with a high probability.
potential profit. As a rule, the larger a trader's
deposit is, the more calm the trading is. 5) Examples of the Triple Bottom
figure.
It is also important, if the price is trading in your XRP / USD 1 D
favor, and according to the plan you should
already fix the profit, it is advisable to stay in the
position while you get an additional profit instead
of the planned one. But, you should not forget
about protecting your profit with stop-loss or
partial fixation.

There must be a strategy and a plan. At the same

time, your strategy and plan should be malleable
from market situations. Here we see not even a "Triple Bottom", but a
"Fourth Bottom"). The target has been worked out
completely. In such cases, I am more interested in
trading inside the figure, rather than trading the
figure development itself in the future. Roughly
speaking, this is trading in channels. Everything that
after the "Double Bottom" does not reverse, but
continues to trade in a sideways movement is a
potential horizontal channel, with minimal risks and
maximum profit, which is not comparable at all in
trading on different patterns. On the example below
I have shown that for the same time period if you
were in position you would have earned about
100% instead of +33%.

XLM / BTC 1 D

XLM has a similar pattern as on XRP. Here you can

see from the chart that besides technical analysis of
the pattern itself, it is necessary to take into account
all strong local support and resistance levels. Which
have much more influence and information about
possible price movement than the pattern itself that
is being formed.

After breaking the "Neck" line, the price rushed to

the former strong support of the coin, which has
now become resistance. As a result, instead of
+10% the price reached +37%. And I want to note
that this is a very common situation on the market.
The price is magnetically pulled to the previous
strong support or resistance level.
 Description of the "Rectangle"
figure.

The "Rectangle" pattern is one of the main classic

CONTENTS: continuation patterns in technical analysis, which
shows a period of consolidation, in the form of a
1) Description of the "Rectangle" figure. lateral flat trend of price movement on the chart.
This pattern is very similar to the "Flag" pattern, but
unlike it, its resistance and support lines have a
2) "Bullish Rectangle".
horizontal position, and there is no flagpole. Price
moves inside the figure, between the support and
3) "Bearish Rectangle". resistance lines.

4) Features of the "Rectangle" figure. This figure appears on different time frames. On
large time frames it may indicate that the price is
5) Features of trading using "Rectangle". artificially jammed into the horizontal channel to
gain a position. Orders in the order book with the
chart will give you a more accurate picture of what
6) Variants of trading using "Rectangle". is happening.

7) 1 variant. Trading the "Rectangle" after the Very often the formation of the figure is associated
breakout of resistance/support level. with the expectation of important news, as a result
of which market participants are in doubt or unsure.
Then, after the publication of news confirming the
8) 2 variant. Trading the "Rectangle" inside the
expectations of market participants, the price starts
figure. to move in the direction of the previous trend.
Most often, the price breakout occurs in the
9) Examples of the "Rectangle" figure (bullish / direction of the previous trend, so the rectangle is
bearish) on trading instruments. considered to be a continuation pattern. However,
sometimes the price can break through the figure
and move in the direction opposite to the previous
trend. In this case, the rectangle can become a trend
reversal pattern. For example, it happens on the
background of very important positive/negative
news on this instrument.

This figure is very easy to identify on the charts. It

looks like a small lateral trend or a trading hallway.
The shape of the figure shows the equal strength of
bulls and bears. And until the support/resistance line
is broken, it is most likely that the rectangle Features of the "Rectangle"
indicates the continuation of the current trend.
The rectangle pattern is considered to be formed figure.
only after the price has broken the support or
resistance line.

"Bullish Rectangle".
If this pattern occurs on a bullish trend, and the
price breakout occurs upwards - this figure is
called a bullish rectangle.
1) At least four touch points (two for each of the
horizontal support and resistance lines) are
required to form a rectangle pattern. It is allowed
that these points form not quite ideal horizontal
lines of the figure. Not always figures are perfect "
according to the book", there are always permissible
deviations.

2) Often when a support or resistance level is

broken, the lines form "mirror levels". A support
level becomes a resistance level and vice versa, a
resistance level becomes a support level. This
feature is very easy to use in trading.

3) The rectangle width:

a) in an ascending trend, in most cases the
"body" of the figure is more wide.
b) on a descending trend, in most cases, the
"body" of the figure is more narrow.
"Bearish Rectangle".
4) the longer the "body" in the formation of a
If this figure occurs on a bearish trend, and the rectangle, the greater will be the price movement
price breakout occurs downwards - this figure is in the direction of the breakout.
called a bearish rectangle
5) the longer the time interval of the chart (time
frame), the more significant is the breakout of
the figure's price in one or another direction on the
chart.
 Features of trading using pattern, make sure to wait for the Japanese
candle to close outside the pattern (resistance
"Rectangle". level).

5) If the "Rectangle" pattern was broken in the

direction opposite to the previous trend, the
signal will be weak or medium strength.
Therefore, it is necessary to do additional market
analysis or refrain from trading. I do not trade
against the trend. It is very risky and usually not
worth it.

Variants of trading using

"Rectangle".

1) To identify which way the price is likely to

break, analyse the indicators inside the pattern
(in which direction of price movement inside the
pattern the volume indicators were rising, and in
which direction they were falling). This often
gives you an understanding of what is happening in
reality. Also analyse the buy-sell history from time
to time, this will be the next clue in which direction
the breakout will occur.

2) The global trend on a large time period can 1 variant.

give a clue where the rectangle will be broken. Entry into the deal only after breaking through
For example, if you are working on a 4-hour chart, the support / resistance level.
look at the trend direction on the daily chart. In
most cases, the trend on the small timeframe will 2 variant.
break in the direction of the larger daily trend Trading inside the figure. Buy at the support line
because the daily support and resistance levels are and sell at the resistance line.
stronger.
It is also important that if the price is trading in
3) When entering a position, it is necessary to put your favour, and according to the plan you are
Stop Loss. Exceptions are of course if you control supposed to take profit, it is reasonable to stay in
the price. the position while you get additional profit instead
If you use the first variant of work (trading inside of the planned one. But, do not forget about
the figure), then Stop Loss should be placed behind protecting your profit with a stop loss or partial
the support line. If you use the 2nd variant of fixation.
rectangle trading (entry after breakout), then you
put Stop Loss just below the resistance line, which Always protect your profits! Don't let profits turn
has broken through and now may become support. into losses. A compound % can do wonders with the
To avoid entering a position during the false right approach.
breakout, it is recommended to enter the trade after
the price fixation on the pullback. There must be a strategy and a plan. At the same
time, your strategy and plan should be flexible to
4) If you want to open a position not on a market situations.
pullback to the support/resistance line from the
outside, but immediately after breaking the
 1 variant. Trading the
"Rectangle" after the breakout
of resistance/support level.

Setting targets while trading inside a

pattern

If we assume that a lateral movement "rectangle" is

forming now, and that the formation of the figure is
not over yet, then it makes sense to open a counter
position from the support or resistance level in the
Setting targets while trading after a expectation that the price will reach the opposite
resistance/support level breakout. side of the rectangle.

This is equivalent to trading in channels.

This trading method, in my opinion, has a high
coefficient of positive outcome.

This trading variant implies getting profit from the

price movement inside the figure. The trading
method is similar to trading in horizontal
accumulation channels. When the price reaches the
lower boundary of the figure (support line), we
open a buy position. STOP LOSS is placed under
the support line. The profit is fixed when the price
reaches the upper boundary of the figure (resistance
line). This is a simple and predictable trade.

As a rule, after the breakout, if it is not a fake one,

the price works out to the width of the rectangle.
The target should be calculated from the mirror
level.

2 variant. Trading the

"Rectangle" inside the figure.
If it is possible to open a short margin trade on this high probability this lateral movement of the
instrument on the stockmarket. We do the same "Rectangle" pattern will be broken down and there
actions but in reverse. STOP LOSS is now placed will be a continuation of the downtrend.
behind the resistance.
It is also worth to remark that the "Bearish
Examples of the "Rectangle" rectangle" pattern existed during almost 1 month
(28 days). If you had traded inside the figure
figure (bullish / bearish) on according to the 2nd variant of targets setting from
trading instruments. the support line to the resistance line, the profit for
the month would be 5 by 15%=+75%. You should
agree that this is not a bad result, if we take into
MANA / BTC 1 day. "Bearish rectangle"
consider that the risks are 2-5% depending on the
risk management of each. STOP LOSS under the
support line. Earned +75% well and at most we take
away -5% if we got out on the stop-loss. Profit
+70%, instead of +15% on the classic 1 variant of
trading and waiting for 1 month if we went short.
But here is the trouble, there is no margin trading on
this coin.

It is also worth noting that instead of -15%

4 times 23%=96%-5%(Stop Loss)=+91% On a (according to the classical variant of targets setting),
falling market for 35 days when the rectangle broke down, the price went to -
As we can see from the history inside the rectangle 33%. Which is also expected by the way. How can
figure (mini channel) we could take the movement 4 this be so? Note that the price dump before stopping
times 23% for 35 days since the figure existed. in the lateral movement of the rectangle was also
Even once about +30%. When we drew a double from the peak at -32% (if we consider the resistance
bottom and showed that there will be a trend of the rectangle).
reversal. In the end, they tricked. We see a long
shadow of a fake breakout in the middle of the I will explain below why I took this exact number.
pattern formation. Imagine that this dump before the canvas of the
rectangle is the flagpole of the flag in the lateral
PPT / BTC 1 day. "Bearish Rectangle". horizontal movement of the canvas with the length
of the whole month. And, therefore, the target on
the short is the length of the flagpole - 32%. That's
the secret to why price behaved the way it did. It
doesn't matter what the "book" says, that it shouldn't
happen, that it's just an accident. One thing is
important - the efficiency of work for making real
money.

On this example we can see that the coin is in a There are no accidents, there are random patterns
pronounced descending trend, there are no locally that need to be understood and used.
strong support levels. This all gave clues that with a
 The "Cup" figure, or as it is often called "Saucer",
"Rounding bottom" is a long term figure predicting
long term growth that looks like a concave arc. The
pattern can be detected on large timeframes, most
often on weekly timeframes. It's also can be found
on daily timeframes but only with instruments that
go through their cycle quickly (cryptocurrency).

Rounding bottom is quite rare, but very reliable

bullish pattern. The figure usually forms at the end
of a long-term bearish trend and as a rule signals a
market reversal. It should be noted that perfect
symmetry of the figure is not a necessary condition.
The main thing is the presence of its core
CONTENTS:
components: price down, bottom, price up and
resistance breakout.
1) Description of the "Cup" figure ("Saucer",
"Rounding bottom").
Ideally, the formation of the "Cup" pattern usually
occurs in a narrow price range while the market is
2) Mirror image of the "Cup" figure - "Inverse cup"
calm with the lowest volatility, when the trend
figure.
reversal occurs smoothly, without major price
jumps. If price jumps do occur, the price soon
3) Figure formation stages.
returns to its usual range. The figure signals about
long-term character of trend movement formation.
4) Figure formation and volume changes.
The longer the figure is formed, the stronger the
signal is considered to be. The most reliable
5) Targets setting when working with the figure.
patterns are those that have been forming on weekly
charts for at least several months. The longer the
6) Examples of the "Cup" figure on trading
timeframe, the more reliable is the signal. A
instruments.
rounding bottom is a long-term figure and can
extend on the chart for a long period of time.
Description of the "Cup" figure
("Saucer", "Rounding bottom")

Mirror image of the "Cup"

 figure - "Inverse Cup" figure. slowing rate of price decline.

2) Bottom - the lowest price point. It is the

geometric centre of the figure. It must be on a
gentle bottom (smooth bottom, no peaks). Although
sometimes on the bottom there are such formations
as "Spike" down or closed squeezes. The main thing
is that these local formations do not break the
general picture of price movements and the figure
globally. If the lower price point forms a so-called
flat spot on the chart, the trading volumes decrease
smoothly, and at the moment of price jump
upwards, they increase sharply. Another price surge
can be a buy signal if the current price high is
higher than the value of the previous high.

An "Inverse Cup" is a reversal pattern that forms 3) Price ascent - the low is followed by an
at the top of an uptrend and demonstrates a slow ascending, which should ideally be symmetrical to
gradual change in trend accompanied by a change in the descending, and last as long as the first phase
trading volumes. In appearance, the figure looks (price descent). There is a trend of price growth
like an inverted cup or a rounding top. That's where with gradual acceleration.
the name comes from. The rounding top is a fairly
rare but very reliable bearish pattern. The figure 4) Crossing the resistance formed by the upper
usually forms at the end of a long-term bullish trend boundary of the whole figure (passes through the
and as a rule signals a market reversal. For more maximum point of the figure at the beginning of the
details, read the article "Inverse Cup" ("Inverse period of its formation) is an additional
Saucer", "Rounding top"). confirmation of the rounded bottom and the final
phase of the formation of the figure. After the price
Figure formation stages. is broken through and consolidated, the resistance
level turns into a support level. When resistance is
crossed, the volume usually rises sharply.

The "Cup" figure consists of the following steps:

1) Price descent is the first phase of the figure.

Price decline trend with gradual deceleration. In the
classical case it should represent a smooth arc, but
in practice its shape can be flat or contain
correctional minima and maxima on the contrary.
The main condition in this case is a gradually A round bottom is, in other words, a gaining
position by major market players when it is very About the targets, there is no exact opinion among
difficult to keep the price from rising. When it is traders. It should be understood that this is a long-
no longer possible to do this - the 3rd phase of the term figure and has a pronounced bullish character.
formation (i.e. growth) begins. In most cases, the 3rd phase (price ascent), ends
with the 4th phase by breaking through resistance
Figure formation and volume and fixing the price above it. Thus completely
confirming the figure. But you have to realise that's
changes. not always the case! There are exceptions. It is also
important that if the price is trading in your
Trading volume during a rounded bottom usually favour, and according to the plan you should have
follows the price action, repeating the shape of the already locked in a profit, it is reasonable to stay in
figure, decreasing in the first part and gradually the position while you get an additional profit
increasing in the second part. At the beginning of instead of the planned one. But, don't forget to
the formation of the figure, the volume increases, protect your profits with stop-loss or partial
decreasing at the bottom of the "Rounding bottom" fixing.
(phase 2). In phase 2, volume at minimum values.
The lowest volume values should be at the bottom. There must be a strategy and a plan. The strategy
As the bottom rounds out and the price rises, and plan must be flexible in relation to the market
volume increases. In the second part of the figure, it situation.
should gradually increase and have a peak value in
phase 4, during the resistance breakthrough. A very I will show you how I trade these formations. As a
important indicator is the increase in volume as the rule, I enter at the 2nd phase at the "Bottom", but
pattern completes (resistance breakout). If the lower when the trading volume starts to increase (the
price point (the "Bottom" phase) forms a so-called beginning of the 3rd phase - ascending). It's very
flat spot on the chart, the trading volumes decrease important not to "sit on the bottom" for too long.
smoothly, while at the moment of price jump Time is money.
upwards, they increase sharply. Another price surge
can be a buy signal if the current price high is I get out of the position in 2 stages according to
higher than the value of the previous high. the situation:

Targets setting when working a) taking out a large part of the position ( about
70%) just before the resistance (before the
with the figure. beginning of phase 4).

b) if the price could not break the resistance or

consolidate - I exit the market with the remaining
30%.

c) if the price was able to break through the

resistance and consolidate. Resistance has turned
into support. I re-enter on the price pullback with
the same 70% that I got out in advance before
resistance. Very often it's the price I came out at, or
differs by a couple of % to the upside. The
confirmed new support level gives great potential
for further growth. It is very important here that
there is not a big gap between selling and buying. If
after confirming the support level the price went Greed breeds poverty.
high - I trade the remaining 30% of the position.
Examples of the "Cup" figure.
Targets. Option 1
AUD / USD 1 week.

The figure has been forming for 3 years. After

breaking the resistance level and successfully
retesting it, the price continued its uptrend and
gained +46% since the breakout.
Targets. Option 1
ICX / BTC 1 day. 2018 May

Here on the example of this pair you can see very

well when in the 2nd phase (the beginning of the
Why am I doing this? And very simply - often 3rd phase) on the pullback it was necessary to enter.
cheated, it is on this figure at one time I was Notice the volume at this time. Also, this example
cheated, because I worked according to the book. illustrates well why I always exit most of my
But gained invaluable experience through it. When positions before resistance.
the price failed to consolidate in phase 4 I had no
liquidity to close the position at good prices. When Also pay attention to volume during a resistance
traders saw that there was no consolidation above level breakout. It increases, but then goes into
the resistance level - the "panic sell" started. Instead decline. And as a consequence there is no buying
of a solid profit, I got much less. I had to sell in interest and consolidation above the resistance
parts with buybacks almost to the entry point. level. Panic sell and the downtrend begins. I was
trading this coin at the time. Took far less profit ADA / BTC 1 day.
than I could have. It was hoped the level would
hold. Didn't come out, although I could have come
out for 2 weeks. Then there was no normal liquidity
to get out at one time. I remember the developers
were spamming "important news" before breaking
resistance and while holding the level. News -
which was not destined to happen. And by the way
what they promised at the time to do "within
weeks" a year and a half later has not been done.
"Positive News" was only invented to create a
movement. More on this in the article section -
market maker. I'm showing this example on purpose. Pay attention
to the fact that the general trend is downward.
Everyone can make mistakes, including you. Your According to TA rules, such figures should not be
formed on a downtrend. But we can see that in this
mistakes are invaluable experience.
example, it's formed. Clearly, it's a cryptocurrency,
XAU / USD (gold) 1 day. and the small liquidity allows you to draw whatever
you want at will.

Pay attention to the trading volume, it is exactly

confirmed as in the classical variant of the
formation of this figure on the up. But instead of
Target +63%, the price made +30% - exactly half of
it. This is probably due to the downtrend and
people's "knowledge" that such figures should not
be formed on a downtrend. But anyway +30% is a
good result.

Here in this example we see how trading volume

increases in phase 3. You can see there's a buyer. In
phase 4 there is a breakout of the resistance level
and consolidation. The pullback in price was not
significant. Then impulse, high volume and the
formation of an "Ascending Bullish Triangle". It is
very important in forming these formations to pay
attention to volume and understand what is
happening and why.
 CONTENTS: Ideally, the formation of the "Inverse Cup" pattern
1) Description of the "Inverse Cup" figure ("Inverse usually occurs in a narrow price range while the
saucer", "Rounding top"). market is calm with the lowest volatility, when the
trend reversal occurs smoothly, without major price
2) Mirror image of the "Inverse Cup" figure - "Cup" jumps. If price jumps do occur, the price soon
figure. returns to its usual range. The figure signals about
long-term character of trend movement formation.
3) Figure formation stages. The longer the figure is formed, the stronger the
signal is considered to be. The most reliable
4) Figure formation and volume changes. patterns are those that have been forming on weekly
charts for at least several months. The longer the
5) Targets setting when working with the figure. timeframe, the more reliable is the signal. A
rounding top is a long-term figure and can extend
6) Examples of the "Inverse Cup" figure on trading on the chart for a long period of time.
instruments.

Description of the "Inverse

Cup" figure ("Inverse saucer",
"Rounding top").

Mirror reflection of the "Inverse

Cup" figure - "Cup" figure
An "Inverse Cup" is a reversal pattern that forms
at the top of an uptrend and demonstrates a slow
gradual change in trend accompanied by a change in
trading volumes. In appearance, the figure
resembles an inverted cup or a rounded top. That's
where the name comes from. The rounding top is a
fairly rare but very reliable "bearish pattern". The
figure is usually formed at the end of a long-term
bullish trend and usually signals a market reversal.
It should be noted that perfect symmetry of the
figure is not a necessary condition. The main thing
is the presence of its key components: price ascent,
top, price descent and breakdown of the support The "Cup" figure, or as it is often called "Saucer",
level. "Rounding bottom" is a long term figure predicting
long term growth that looks like a concave arc. The contrary corrective minima and maxima. The main
pattern can be detected on large timeframes, most condition in this case is gradually decelerating rates
often on weekly timeframes. It's also can be found of price growth.
on daily timeframes but only with instruments that
go through their cycle quickly (cryptocurrency). 2) Top - the upper price point. It is the geometric
Rounding bottom is quite rare, but very reliable centre of the figure. It should be located on a
bullish pattern. The figure usually forms at the end gentle top (smooth top, without significant peaks).
of a long-term bearish trend and as a rule signals a If the upper price point forms a so-called flat spot
market reversal. It should be noted that perfect on the chart, the trading volumes are smoothly
symmetry of the figure is not a necessary condition. decreasing, and at the moment of the price jump
The main thing is the presence of its core downwards, they sharply increase. Another surge of
components: price down, bottom, price up and falling prices may be a signal to sell if the
resistance breakout. Read more in the article "Cup" maximum of current prices is lower than the value
("Saucer", "Rounding bottom"). of the previous maximum.

Figure formation stages 3) Price descent - the high is followed by a descent,

which should ideally be symmetrical to the ascent
and last as long as the first phase (price ascent).
Although as a rule the third phase is always shorter
than the first one. There is also a tendency of price
falling with gradual acceleration.

4) Crossing of the support level formed by the

lower boundary of the whole figure (passes through
the minimum point of the figure at the beginning of
its formation period) is an additional confirmation
of the rounded top and the final phase of the figure
formation.
After the price breaks through the support level and
consolidates, the support level turns into a
resistance level. When the support level is crossed,
the trading volume usually increases strongly.

Figure formation and volume

changes

The "Inverse Cup" ("Inverse Saucer",

Rounding Top) figure consists of these steps:

1) Price ascent - the first phase of the figure. The

trend of price growth with gradual deceleration.
In the classical case it should be a smooth arc, but in
practice its shape can be flat or contain on the
Trading volume during a rounded top tends to Targets setting when working
follow the price movement. At the beginning of the
formation of the figure, the volume increases, with the figure
decreasing at the top of the "Rounded Top" (phase
2). In phase 2, the volume is at minimum values. At
the top should be the lowest volume values.
As the top rounds and the price falls in the second
part of the pattern, the volume should gradually
increase, especially in the area of the support level
breakout in the 4th phase of the pattern formation.
If the upper price point (phase 2 - "top") forms a so-
called flat spot on the chart, the trading volumes
decrease smoothly, while at the moment of a price Traders do not have an exact opinion about the
jump downwards, they increase sharply. Another targets. It should be understood that this is a long-
price surge could be a sell signal if the current price term figure and has a strong bearish character. In
maximum is lower than the value of the previous most cases, the 3rd phase (descending price), ends
maximum. with the 4th phase by breaking the support level and
fixing the price below it. Thus completely
When the price is still growing, but at the same confirming the figure. But you have to realise that
time, the volume indicators start to decrease, it this is not always the case! There are exceptions.
gives a signal that the trend is about to change. You It is also important that if the price is trading in
need to feel the pulse of the current market. After your favour, and according to the plan you should
the top of the figure is formed, the price starts to have already fixed the profit, it is reasonable to stay
turn downwards, while the volume indicators, on in the position while you get an additional profit
the contrary, start to grow. instead of the planned one. But, you should not
forget about protecting your profit with stop-loss
During the formation of the top of the figure, a or partial fixation.
sudden jump downwards is possible, which is
accompanied by an increase in the volume There must be a strategy and a plan. At the same
indicator. A break down below the low of this jump time, your strategy and plan must be flexible in
is considered to be a sell signal, as it is confirmation relation to the market situation.
of the formation of the pattern.
I will tell you how I trade such formations. If I held
Also, to confirm the "Inverse Cup" pattern, be sure a long position and waited for further growth of the
to watch that the volume indices necessarily instrument, the first signal to exit the position will
increase when the price decreases on the chart. be "rounding of the top" and increasing trading
volume. This indicates that the trend will soon
change to a downtrend. Everyone sees the price
decreasing and the demand for the asset weakening.
Everyone wants to get out of the position faster.
As a rule, I exit at the market price, or in parts with
buybacks if I see that liquidity is not enough and the
price may drop. You can also put a stop-loss to
protect profit, it is very effective.
 Be less greedy than others and as a consequence
you will be richer than them.

It is also very important that if you trade in short on

margin you should not be afraid of your mistakes,
the risks of which can be minimised. As well as
Another option to enter short, if the instrument manipulation by stock exchanges, which do not shy
allows it. As a rule, I usually enter into a short at the away from it. For example, at the most crucial
boundary between the second and third phase of the moment, orders will not work or the site will "
pattern formation. I enter at the "Top", but when the freeze" when it is favourable to the stock exchange.
price starts to decrease (rounding of the top) and at
the same time the trading volume starts to increase
(the beginning of the 3rd phase - descending). It is Examples of the "Inverse Cup"
very important not to stay in a position for a long figure on trading instruments
time. Time is money.
XOM Week 1. Formation of 10 months duration.
Unlike the mirrored "Cup" figure (where I have
more sophisticated and plastic trading methods in
relation to the market situation) in this figure I fully
exit a short position at the planned target.
The reason is one - there are not so many
instruments that can be traded in short, as opposed
to spot trading in long.

No matter how much virtual money you earn on

the stock market, as long as it is not cashed out -
the profit is zero!
XOM Week 1. Formation of 10 months duration.
In Global.

Here we can perfectly see how a rounded top 10

months long became the breaking formation of an
uptrend that changed to a downtrend.

XOM 1 week. Head and shoulders. 1.6 years.

If we take a closer look, the rounded top (the top of

a long-playing uptrend) is nothing but the central
figure - the head, of such a figure as - "Head and
Shoulders". There's nothing surprising about it. Any
TA figure can be part of another figure or transition
smoothly into another, as we can see in this
example. Also, some traders classify the "Rounded
Top" ("Inverted Cup", "Inverted Saucer") as one of
the variants of the "Head and Shoulders". But it is
necessary to understand that the round top is a
figure in most cases of large timeframe and as a rule
it is a reversal figure of the global trend.

Mechanically memorising variations of price

movements without understanding the
reasons for those movements will make you
poor and easily manipulated
 The "Cup and handle" (Mug) is a trend
continuation pattern. It is very similar to the
reversal "Saucer" (Cup) pattern, but without the
"handle". One of the main features of this figure is
that it is a continuation figure in the uptrend. There
is also a version of this figure in the form of a
mirror reflection in the downtrend: "Inverted cup
and handle".

The figure got its interesting name because of its

external similarity to the cup form.

The "Cup and handle" (Mug) figure consists of

two parts:
CONTENTS:
1) Cup.
1) Description of the "Cup and handle" (Mug)
figure.
2) Handle.

2) Mirror reflection of the "Cup and handle" figure -

"Inverted cup and handle".

3) Stages of figure formation.

4) Figure forming and volume changes.

5) Setting targets when working with the figure.

6) Examples of the "Cup handle" figure on the

trading instruments.

Description of the "Cup and This figure occurs on an uptrend. Very rarely it can
handle" (Mug) figure be found on a downtrend at the moment of its
reversal. The figure begins to form when the bottom
in the shape of a concave arc is formed on the
uptrend. This is the first part of the figure - "Cup".
Once it is completed, the second bottom is then
formed, which is much smaller than the first one.
The edges of the "Cup" and "Handle" are about the
same level (they form resistance). Upon completion
of the "Handle" formation, the price breaks through
the resistance line from below to upwards and the
pattern is successfully confirmed.
The "Cup and Handle" figure is not always The " Inverted cup and handle" pattern is forming
perfectly formed. For example, the edges of the on a downtrend (bearish trend) and provides a
"Cup" may have different heights, the bottom of the signal to sell. According to the signal strength in
"Cup" may not have a very smooth curve and the comparison with the bullish variant of the "Cup and
"Handle" may have a horizontal price movement. handle", the bearish variant of the figure provides a
Timeframe is very important here. The more time weak signal and quite often does not work.
it takes for a pattern to form, the more reliable the
signal is considered to be. The larger the The "Inverted cup and handle" figure is a mirror
timeframe, the more reliable the signal. reflection of the "Cup and handle" figure and
exactly the same rules are applied to it. Once again,
Usually at the bottom of the "Cup" the volumes the figure on the bearish trend is much weaker than
have their minimum values. Then volume its bullish variant. Read more in the article:
indicators during the second part of the "Cup" "Inverted cup and handle".
forming should gradually increase. On the
pullback, the price during formation of the Stages of figure formation
"Handle" should decrease. On the resistance
breakout of the "Handle" volume should have the
maximum value. When the resistance of the figure
is broken through.

The figure's work out target is the distance

between the minimum and maximum of the
figure (resistance) that carried out from the
resistance breakout zone. But global and local
1) Since this is a continuation figure of an uptrend,
levels need to be considered when setting targets.
the first requirement for the formation of this figure
How the figure targets will work out depends on
is an uptrend. Very rarely this pattern can be
these levels. You can also work with targets of the
formed at the very end of a downtrend at the
"handle" of the figure. We will discuss all this in
moment of its reversal. Ideally, the trend should be
more detail below in the article.
strong and long enough, but not too "old".
Otherwise, the further growth and confirmation
Mirror reflection of the "Cup potential of the pattern is sharply reduced.
and handle" figure - "Inverted 2) The "Cup" figure should have a smooth
cup and handle" concave bottom. In an ideal "Cup and handle"
("Mug") figure the maximums of the cup (edges on
the sides) will be at the same level (general
resistance), but this is not a necessary requirement.
On the other hand, the more "perfect" the shape of
the "Cup", the stronger the signal. The more
rounded shape of the figure "guarantees" a quite
good consolidation and it is a more reliable sign
with strong support and resistance levels.

3) After the "Cup" is formed, the second necessary

component of the figure is forming named as
"Handle". After the formation of the maximum on
the right side of the "Cup", there is a small pullback,
which forms the "Handle". It can look different and
can take different shapes and figures: flag, pennant,
triangle..... There are also found these figures with a
"Handle" without a tilt, but with a horizontal
movement. Usually, the handle does not take more
than 1/3 of the height of the cup.

It is considered that the smaller the "Handle" is,

the stronger the breakout and further movement
will be. The edges of the "Handle" are about the
same level with the edges of the "Cup", which
confirms the resistance of the figure once again.
"Handle" is the last stage before the final formation
of the figure and the following resistance Setting targets when working
breakthrough. The breakout level of the pattern is
located at the level of the edges of the "Cup" or a bit with the figure
lower. If the "Handle" is tilted downwards, then the
breakout level is located at the level of resistance of
the "Handle".

Figure forming and volume

changes

The figure's work out target is the distance

between the minimum and maximum of the
figure (resistance). For a schematic illustration,
look at the picture below. If you use stop loss, it is
reasonable to place it below the lower level of the
handle.

Typically, the volume at the bottom of the "Cup"

has a minimum value. Then volume indicators
during the formation of the second part of the
"Cup" should gradually increase. On the pullback
during the formation of the "Handle" the volumes
should decrease. On the resistance breakout of
the "Handle" the volume should be at its
maximum value. Take a look at the picture below.
 The same trading pair and the same figure, but with
It is also important that if the price is trading in zoomed view. Pay attention to the reduced trading
your favour, and according to the plan you should volume during the formation of the second figure's
have already fixed the profit, it is reasonable to stay part - "Handles". Then a strong volume increase
in the position while you get an additional profit during the breakout of the figure's resistance.
instead of the planned one. But, you should not
forget about protecting your profit with stop-loss ETH / USD 1 day.
or partial fixation.

There must be a strategy and a plan. At the same

time, your strategy and plan should be plastic to
market situations.

Examples of the "Cup handle"

figure on the trading
instruments
The figure resembles the "Cup and handle" very
XAU / USD 1 day. roughly. However, the most important thing is
earning, but not perfect figures. It is necessary to
understand that the market is not about perfect
drawings from the books. Sometimes the price
draws roughly resembling figures from classical
book examples. Our mission is to identify them and
get profit from it. However, all the requirements for
identification are available.

On this chart we have an uptrend, a "Cup" (although

not perfect in shape), a "Handle" - a descending
channel (twice as long as the classical version) and
An example of classical working out of the "Cup a clear resistance level. An interesting thing to note
and handle" pattern in the trading pair of gold to is that the "Handle" was twice as long as it should
dollar. The figure became a continuation of the be, and as a result, instead of the planned +34.6%,
uptrend. the price went through +61% (twice as much).

XAU / USD 1 day. A popular opinion is that a "Cup and handle" cannot
be formed during a downtrend. This is completely
wrong. And here is a clear example.
 DOT/USDT +45% +300% 6) Examples of the "Inverted cup and handle" figure
on the trading instruments.

Description of the "Inverted cup

and handle" figure

Firstly there was a price growth to the resistance

zone of the cup +50% as it was shown and then a
pullback. On the date of 13th there was a trend
reversal and growth of +900%.
The "Inverted Cup and handle" is a mirror reflection
of the "Cup and handle" figure. Unlike the "Cup and
handle", which is a bullish figure, the " Inverted cup
and handle" is a bearish figure and gives, therefore,
the opposit signal.

The figure got its name because of its external

resemblance to the shape of a cup.

The figure "Inverted cup and handle" (Mug)

consists of two parts:

1) Cup.

2) Handle.

CONTENTS:

1) Description of the "Inverted cup and handle"

figure.

2) Mirror reflection of the "Inverted cup and

handle" figure - the "Cup and handle" figure.

3) Stages of the figure formation.

4) Figure forming and volume changes.

5) Setting targets for working with the figure.

"Inverted cup and handle" starts its formation with a
bullish trend, which progressively decelerates to form when the bottom in the shape of a concave
("curves") and gradually turns into a bearish trend, arc is formed on the uptrend. This is the first part of
thus forming an "Inverted cup" figure on the chart. the figure - "Cup". After its completion, there is
Then in the support zone of the "Cup" pattern the another bottom forming, which is much smaller
price stops and makes a pullback upwards, thus than the first one. The edges of the "Cup" and
drawing the second part of the pattern, named a "Handle" are about the same level (they form
"Handle". resistance). Upon completion of the "Handle"
formation, the price breaks through the resistance
The confirmation of the pattern occurs when the line upwards and then the figure is considered to be
price breaks down through the "Handle" channel. successfully confirmed. Read more details in the
This creates a new bearish move. The first target of article: Cup and Handle (Mug).
the short position is the support of the figure (the
base of the "Cup") or the area of the "Handle" Stages of the figure formation.
formation beginning. The second target is the
distance of the entire cup depth carried out from the
support breakout. This figure is almost never seen
on the cryptocurrency market, but on stocks and
Forex it is quite common.

Mirror reflection of the

"Inverted cup and handle"
figure - the "Cup and handle" 1) Since this is a downtrend continuation pattern,
figure. the first requirement for its formation will be a
downtrend. Ideally, the trend should be strong
enough, but not too "old". Otherwise, the potential
for further confirmation of the figure and price
decrease is sharply reduced.

2) "Cup" should have a smooth concave top. In a

perfect "Inverted Cup and Handle", the lows of the
cup (edges on the sides) will be at the same level
(general support), but this is not a necessary
requirement. However, the more perfect the shape
of the "Cup", the stronger its signal.

3) After the "Cup" is formed, the second necessary

The "Cup and Handle" ("Mug") pattern is a trend
component of the figure, called "Handle", begins
continuation pattern. It is very similar to the
its formation. Once the minimum on the right side
reversal "Cup" figure, but without the "Handle".
of the "Cup" is formed, a small pullback occurs,
One of the main features of this figure is that it is a
which forms the "Handle". It can look different and
continuation figure exactly on the uptrend.
take different shapes: flag, pennant, triangle.... Also
this figure can be found with a "Handle" without a
This figure occurs on an uptrend. The figure begins
tilt, but with a horizontal movement. Usually, the
height of the handle does not reach more than 1/3 of
the cup's height. Figure forming and volume
The smaller the "Handle" is, the stronger the changes
breakthrough and further movement will be. The
edges of the handle are about at the same level with
the edges of the cup, which confirms the support of
the figure once again. "Handle" is considered to be
the last stage before the final formation of the figure
and the following break through of the support. The
level of the figure breakout is located at the same
level as the edges of the "cup" or a bit higher, if the
"Handle" is inclined upward (at the level of
resistance of the "Handle").

4) Timeframe is very important here. The more time

it takes for a pattern to form, the more reliable the
signal is considered to be. The larger the
timeframe, the more reliable the signal. As a rule, the trading volume at the top of the
"Cup" has its minimum value. Then volume
5) As a rule, the trading volume at the top of the indicators during the formation of the second part
"Cup" has its minimum value. Then volume of the "Cup" should gradually increase. During
indicators during the formation of the second part the price pullback while the "Handle" is forming,
of the "Cup" should gradually increase. On the the volume should decrease. At the support
price pullback during the formation of the breakthrough of the "Handle" the volume has its
"Handle" the volume should decrease. When the maximum value. For schematic illustration look at
resistance of the "Handle" is broken through, the the picture below.
volume should have its maximum value.

6) The length of the pattern working out target is

equal to the distance between the maximum and
minimum of the pattern (support). The "Upside-
down cup with a handle" pattern is much weaker in
terms of working out targets compared to its
bullish variant.

There are 2 targets in this pattern:

The first target when trading short is the support of

the pattern (the base of the "Cup", or the area of the
beginning of the formation of the "Handle").

The second target when trading short is the

distance equal to the depth of the whole cup which
begins from the support breakout.
 If you use Stop Loss then it is recommended to set
Setting targets for working with above the upper level of the handle.
the figure

The length of the pattern working out target is

equal to the distance between the maximum and
minimum of the pattern (support). The "Upside-
down cup with a handle" pattern is much weaker in
terms of working out targets compared to its Examples of the "Inverted cup
bullish variant.
and handle" figure on the
There are 2 targets in this pattern: trading instruments
The first target when trading short is the support of GBP / USD 1 day.
the pattern (the base of the "Cup", or the area of the
beginning of the formation of the "Handle").

The second target when trading short is the

distance equal to the depth of the whole cup which
begins from the support breakout. It is necessary to
understand that depending on the different variants
on the charts you need to have an individual
approach to every case, according to the clarity of
the figure, local levels and etc.
It is also important, if the price is trading in your
favor, and according to the plan you should already In the example above, we can see a classic work out
fix the profit, it is reasonable to stay in the position of the figure. Downtrend. Formation of the
while you get additional profit instead of the "Inverted Cup" pattern and following its
planned one. But you should not forget about breakthrough. The correction after the breakthrough
protecting your profit with stop-loss or partial formed an ascending channel - "Handle" of the
fixation. "Inverted Cup and Handle" pattern. The volume
indicator during the breakout of the "Handle"
There must be a strategy and a plan. At the same confirmed the final formation of the "Inverted Cup
time, your strategy and plan should be plastic to and Handle" pattern. Note that the breakthrough of
market situations. every figure was accompanied by increased trading
volume. first sight. Practice eliminates all the difficulty.
I have described it to make it clear that it's
The price passed the first target without stopping. It neccessary to see the whole picture, but not just one
is common for a strong downtrend. If the trend figure and variants of its development.
would be weaker, there would be a high probability
of price stopping near the base of the "Handle". Don't be robots who work only "by the book", be
In this example, I would initially work only with the creative and intelligent people. Calculate your own
second (maximum) target of the pattern. One more and others' actions beforehand.
reason to work with the second target is the
formation of the "Handle" far below the support of EURO / GBP 1 day
the "Inverted Cup" pattern (1st part of the "Inverted
Cup and Handle" pattern). This made us realize that
the downtrend is very strong and we should not
expect for a prolonged price stop (trend slowdown)
and especially for a reversal.

There is no general consensus among traders about

setting the second target. Some project the cup
height starting from the "Handle" breakout zone,
and some from the "Cup" support breakout zone. I
guess the reason is that the figure is very rare and its Here's another example that makes it clear that
work out is always various. To understand which individual approach and understanding is required
target is likely to work out, you need to understand everywhere.
what is actually happening on a certain instrument.
Here you need an individual approach and You need not just to know the rules of technical
understanding of the instrument. And this can be analysis, but to understand how it works.
gained only through practice, but not through
theory. EURO / GBP 1 week

After taking the second target, the price fell a little

lower, and the formation of a sideway movement
(horizontal channel) began. It was clear that this is
the "Canvas" of the "Descending Flag" pattern.
"Flagpole" of the flag (descending breakout impulse
of the "Inverted Cup and Handle" pattern) was
formed with huge volume, and the general
downtrend made it clear that the "Descending Flag"
pattern will be confirmed. "Canvas" of the flag was
broken by the descending impulse, the bearish
figure was confirmed. The larger timeframe of 1 week provides us with all
clarity. In this example, we can already see that the
I showed the whole algorithm of transition of one downtrend is slowing down, and sometimes goes
figure into another and the moments that confirmed into sideways movement. The strength of the
the future movements. At first sight it may seem downtrend is weakening, thus, the "planned" work
difficult to understand, but believe me, it is only at out targets may not be reached.
Also, after the "Cup" formation (the first part of the
" Inverted Cup and Handle" pattern without the
"Handle", it was clear that there is a high
probability of forming a trend reversal pattern -
"Double Bottom". And this makes it clear that the
price may not go down as strongly as the first time,
because many traders notice the formation of this
figure, therefore, they do not want to sell.

Stay flexible and smart, calculate all your own and

other people's options in trading beforehand.