Back to BlogMarket Reversals
The cryptocurrency markets have been trending down since Bitcoin and Ethereum, the two largest cryptocurrencies by market cap reached their All-Time Highs back in November 2021.
Since then, Bitcoin has reached a new low recently after dropping all the way down to around $25,000 on May 12, 2022, an outstanding decrease of more that 50%.
There is not a doubt that investors and traders are extremely fearful at these prices. The fear and greed index, used to analyze the emotion and market sentiment, is currently at extreme fear with the index hitting a score of 10 out of a 100
Traders are currently looking for reversal signs to see if the markets is close to a temporary bottom for a relief bounce at least. However, extreme fear can last a while if prices can’t catch a bid. Usually bottoms can take time to form, which is why traders are waiting patiently for such patterns to form.
Reversal patterns are when the market has a strong break from its current trend and the momentum switches completely. These patterns indicate a change in direction which could be from a falling market or a rising market.
There are many different types of reversal patterns, however to name a few and the most common ones are ; double bottoms, falling wedges, rising wedges and heads and shoulders.
All these patterns indicate that a change in direction of the price is likely to happen when upon a breakout
Reversal patterns using Market Spotter
Reversal patterns are proven to be effective and can give traders great opportunities to enter positions, however, it takes a certain experience to spot and time these trades aswell. Combining these patterns with useful trading indicators can give you that extra hand you need when it comes to execution, and Market Spotter could be that set of useful trading tools. Market Spotter is a set of technical analysis indicators which consists of Buy and Sell indicators to help traders enter and exit positions. Executing trades is a crucial part when it comes to trading and Market Spotter helps analyze the price data, making it very easy to understand for any level of user. Combining traditional reversal patterns with Market Spotter’s trading indicators can be the ultimate strategy..
Let’s take an example of how to combinate a reversal pattern with Market Spotter. As you can see on the example below, we can clearly recognize a reversal pattern called “Double Bottom”. Noticeably, Turbo Trend has flashed Buy Signals twice at each bottom indicating a potential entry opportunity. Ultimately, you want to enter a trade at the retest of the neckline of this pattern. However, Market Spotter is no joke when it comes to spotting entries amongst the best indicators for trading cryptocurrencies.
