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Big Cheds, Bear Pattern Guide

09/25/2018 14:56

Welcome to Bitcoin Live.  Below is a sample from Big Cheds candlestick patterns, trends and reversals guide. 

 

Tweezer Top

 

Tweezer top is a bearish reversal candle combination that may appear near the peak of an uptrend. The candle bodies do not have to look exactly the same as they do below, and nor do the candle wick highs have to be EXACTLY the same either.

(Trading tip:  If you are shorting Tweezer tops, set your stops between 5 and 20 points above the high of the wick.  If you spot it at the top of a trend and you are long, it is important to jam your stops tight to the candles or you may give back much of your profits.)

 

Falling three methods

Falling three methods is a bearish continuation pattern (as opposed to rising three methods). In this case you have a bounce attempting to form after a large red candle, and after 3 small green candles a red one comes and wipes out all that progress.

In the example below, we can see $XRP after a nice run is pulling back. Point 1 shows a large red candle, at point 2 the bulls attempted to fight back but were shut down at point 3, forming the falling three methods bearish continuation pattern.

 

(Trading Tip: Since this is a continuation pattern there isn't much reward in trying to long off of this position. If you were shorting, then your short entry should have already been in place.)

 

Bearish Divergence

 

Another potential warning sign is what’s called “bearish divergence,” where a key indicator is going in the opposite direction of the price and may be warning about a future move.  In the below example we see how the price was moving sideways while the OBV (On Balance Volume) went down (lower highs), which equals bearish divergence and gives a hint about the next possible move.

 

In this second example the price was making higher highs, while the OBV was falling (lower highs). This is also an example of Bearish divergence and early warning signal of potential trend change.


(Trading Tip: Since this is an early warning sign, you have an advantage.  If you were long, as usual exit the position or jam your stops tight to protect your profits.  If you wish to short, set your stops just above the highest candles.)

 

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