This post falls into the realm of technical analysis. I was reviewing some 2 hour charts from content another viewer showed me, just so I could see what the market is up to, and see what day to day traders are thinking. I discovered triangles!!!
Triangles happen, they are not completely uncommon, but for most of bitcoin's bull run to 3k, it has formed very few triangles. I was checking, and I really did not see many.
Traders, often swing traders, use triangles as a method of gauging period of volatility. The traditional method is as follows:
- Whatever side the triangle breaks on, is the side you take, with a stop-loss in case you are wrong.
So many people use this method; however, any major triangle is manipulated. All the day traders watch them, and a large one will put in an order to make the triangle break as they want, believing that there will be a rush of orders following the break, giving them more orders to sell/buy into, or perhaps actually successfully manipulating the market higher/lower in certain fringe cases.
Whatever the case, I have learned that most triangles are followed by periods of extreme price swings.
By the end of the 25th of July, we might expect to see these triangles broken both for ETH and BTC. This really wont tell us much because it could be manipulation either way. However, what it does tell me is that in the next 7 days, we should see a dramatic price shift one way or another, deviating from these ranges we have been trading in.
So just remember!!!
- Triangles are manipulated, they will break one way, and then do a U-turn and go the exact opposite of the way they broke
- Triangles rarely ever break how you want or expect them to, some of my worst burns when I was learning some 10 years ago was triangle trades
- Triangles generally are followed by price swings, and I have found this to be their useful feature
Great post! That's the simplest and best break down of triangles I've seen. People like to make them a lot more complicated than they really are. You have a talent for explaining technical trading in layman's terms. Thank you for posting this. Re-Steemed
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Thanks so much for this informative post. I have heard of triangles before though I haven't seen too many applied to technical analysis of cryptocurrencies. So, basically, in the next week, we're either going to see BTC break dramatically out of the triangle or it will fail to break out of it's resistance level then trend lower for quite sometime?
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Here is one example from bitcoin's past:
Really, the textbook on this would say something like, "this period is a period of indecision, where forces for both selling and buying (bull and bear) are duking it out, shuffling prices between ranges, ultimately one side wins rather than a continuation of the struggle indefinitely. To push price down, there must be sellers. To push it up, there must be buyers. When range of buying/selling eventually collapses, a winner must emerge, ultimately dictating the future of pricing."
That said, as a trader, you might only swing trade that for a few days and then decide you no longer know where prices are headed. It's not much of a window of visibility, and they break either up or down, and swing in a given direction. That swing does not have to continue, depending on the situation.
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Thanks for that very informative response. I'm getting the feeling though that this swing is coming very soon. The majority of people expect that come next week the the swing should break upwards especially since a lot of BTC drama for now seems to be over. However, I know that there's always a possibility that it may not do that and break downwards instead.
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Looks like we are hitting a top repeatedly and I would say a sharp swing down is likely. Could of course be totally wrong though!
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That's quite possible. I think the more times we hit that resistance level without breaking it. The greater the chance that the swing down can be very sharp.
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Yes, agreed!
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Thanks man - very useful
I have been looking at these charts as they appear in posts explaining crypto movements and never really understood them. I'd appreciate more info when you have time to write it 😊
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I never understood how you can read a chart with those lines and zones and even triangels wich is the first I hear about. Wondering if those predictions following it up are worth anything because I'd also realy love to predict the market correct. However I have my doubts someone can really know how it will evolve.
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Well, charting is basically trying to understand the people on the other end of the screen. Think of it like a poker game. Instead of reading their faces, you read the tape of the price movement, which is not random but rather the outcome of many behaviors.
Now, what has made charting perhaps even more useful is that a lot of people use charting! Meaning, I can look at a chart, see the signals like triangles, and then I know, every day trader sees that triangle too, and they are assigning meaning to it.
Meaning, most all traders now expect a volatile price swing, because charting exists. Charting is a self-fulfilling prophecy, except it gets manipulated and gamed heavily.
Just as an example, on Poloniex often large orders are placed in the feed to manipulate behaviors of the trollbox and the attitudes of people. Then just when that buy order is needed to support the market, it vanishes. Many traders will panic sell when it leaves too, and I have been there trading one day when one of those large manipulated buy orders vanished. Bitshares crashed within 15 minutes of it leaving. You get good enough at it, and sit in the chat daily, you'll begin to spot the fake buy walls that manipulate people but then vanish.
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Thank you for a very nice post, I really enjoy reading your blog posts and watching your YouTube videos! If I had listened to you from the beginning I think I would have done much better in my first investments and trading than I did now. But it is never too late to learn I guess :)
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I used to lose a lot of money in stocks when I first started. It was really a learning thing, more I got burned, more I learned.
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Awesome post as always! Keep up the great work
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Thanks for the analysis
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Thanks for the insight into triangles and their use. If we cannot depend on this type of technical analysis due to gaming, is there any other type of analysis that you believe is more trustworthy?
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I guess I don't trade technicals usually, but I like to use them to know what traders are thinking.
If I do a trade, my favorite one is to just buy something crashing, which I think has decent fundamentals and isn't going to die. Then you catch an oversold rally and you make decent money on it. It has to be crashing enough, though, that you believe the selling is over and it wont drop much more. A lot of declines aren't good enough, but some are, like the recent bitcoin / market decline.
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Thanks for the instructive response crypto-investor. Your idea seems like a good one. I imagine reducing risk is a major factor in potential of success. How we determine the best way to do that is the challenge.
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Thanks for the tips and info in your post. Do most coins have triangles?
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Most anything put into a chart has a triangle. This info comes from the stock world, but it transfers into crypto when dealing with charts.
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I think it might go down
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Perfect timing to prepare for future,thanks!
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Useful post! Keep up the good work! I upvoted and followed you!
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