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26 July 2021

Here’s 2 ways clever pro traders spot crypto and stock price reversals

Here’s 2 ways clever pro traders spot crypto and stock price reversals


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While several patterns signal a possible trend change, one of the easiest to spot is the double bottom pattern.

This is a reversal pattern, which results in an intermediate to a long-term trend change.

The price turns down but when it nears the level of the first bottom, the bulls again start accumulating, which arrests the decline and starts another relief rally.

When the price rises above the resistance line, it signals a change in trend from down to up.

The minimum target objective for the pattern can be arrived at by calculating the distance from the resistance line to the bottom and then adding the number on top of the resistance line.

Adding this value to the level of the resistance line at $2.96 gives a minimum pattern target at $4.14.

This is because when the reversal setup forms on the weekly chart, it results in a long-term trend change and the new uptrend generally sustains longer.

The demand exceeded supply when the price hit $81.70 in December 2018, resulting in the formation of the first bottom.

This shows that the double bottom is an important reversal pattern, which sometimes leads to strong uptrends.

Many times, traders preempt a double bottom and buy before the price breaks out of the resistance line.

This looked like a double bottom but the bulls could not push the price above the $11,786.01 resistance.

A double bottom is a key reversal pattern, which signals a change in trend but there are some important points to bear in mind.

Before the first bottom forms, the trend should be down because if there is no downtrend then there will not be a reversal.

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