The pattern looks like the letter "W". It indicates an trend and momentum reversal in a particular asset. It is best for analyzing the intermediate to longer-term view of a market. Pattern one of the most reliable reversal pattern after Pattern.
How does Pattern Work?
Pattern works in two phases:
When the major trend is downtrend and forms the first down peak, then from the support the prices bounce to a new higher resistance and unable to break that resistance.
When prices are not able to break the resistance it again goes to the same level and take support form similar levels forming second down peak also . Again due to demand the prices rises up to the resistance and break that resistance. Increase in volumes during breakouts further confirms the reversal move. This marks the completion of the pattern.
Above Chart Explanation:
This is the of EGLDUSDT here we can see in a downtrend prices take support and forms a down peak one and took support form there and bounce back to the above resistance. But prices were not able to break it instead prices got rejection from resistance and the prices again go down forming second down peak. After taking support prices bounces and break resistance due to heavy demand with great volumes.
Usually traders enter on the breakouts and target the next resistance.
Hence, the Pattern is great reversal pattern after Pattern. And it occurs quite often. Most of the traders use it on large time frames like 1D, 1W, 1M.
Please let me know in the comments what do you think about Chart Pattern!
This is just an educational post never trade just any pattern. And please do your research before taking any trades.
PS: We are publishing this for our Indian Audience again!
Happy Trading !