Steemit Crypto Academy Contest / S15W6: Chartist analysis

Chartist analysis analyzes historical trends to forecast future price movements. Sort of like trying to connect the dots to find a pattern. As an illustration, the shoulder-head-shoulder pattern points to a potential shift in the price's direction.

However, this is not a given. It is not a given that the pattern will materialize simply because it appears. It is advisable to combine this chart data with additional information when investing in cryptocurrencies such as STEEM in order to make more informed choices.

Therefore, although they can provide clues, chart patterns are not magic spheres. It is similar to reading traffic signs in that it is useful, but you still need to be alert for any unexpected turns.

Investors use chart patterns as a kind of guidebook. By examining historical trends, they assist us in predicting future price movements. We can predict whether prices will rise or fall by identifying patterns such as the shoulder-head-shoulder.

Though not infallible, these patterns offer us hints. It is helpful to combine them with other information, such as news and market emotion, to make better selections.

Thus, chart patterns are useful tools even when they aren't magical. The market's twists and turns are navigated with the help of something akin to breadcrumbs in a forest.

One technique to identify a potential market trend reversal is to look for the shoullder-head-shoulder pattern. It appears to be three hills, the highest of which is in the middle. The head is the tallest hill, the left shoulder is the first, and the right shoulder is the third. This pattern indicates that prices may be about to decline when it appears following an increase.

It like spotting a peak between two smaller ones. It suggests that sellers may soon gain the upper hand and that the purchasing pressure may be waning. This pattern helps investors determine whether to sell now or hold out for a better deal.

A technical analysis pattern known as the head & shoulders pattern suggests that the current trend may be about to reverse. It is made up of three peaks, the largest of which is the center peak, also known as the head, and the two smaller peaks on either side as the shoulders. The neckline is the line that joins the lowest points of the two troughs that are situated between the peaks.

General outlook

Left Shoulder: The first peak forms during an uptrend, followed by a temporary decline.

Head: The highest peak forms next, representing the climax of buying pressure.

Right Shoulder: The third peak forms, usually lower than the head, indicating a weaker rally than the previous one.

Neckline: Connects the lows of the two troughs between the peaks, serving as a support level.

Reversal Signal: Following the formation of the right shoulder, price action below the neckline may indicate a possible change in trend from an upward to a downward one.

Validation of the pattern is ensured by a successful break below the neckline and increased volume.

Trading view complex outlook

Entry: Following a price breach below the neckline, traders frequently open short bets.
positioned above the right shoulder to reduce possible losses in the event that the pattern breaks.

Target: The probable price decrease following the breakout is frequently estimated using the distance between the head and the neckline.

The inverse head and shoulders pattern, which is the reverse of the classic head and shoulders pattern, usually forms at the bottom of a downtrend and may indicate an impending uptrend reversal. This is how it originates:

Left Shoulder: The pattern starts with a price decline that reaches a low point. This is followed by a brief upswing that forms the left shoulder.

Head: The pattern's head is formed when the price declines once more to create a lower low following the left shoulder. Typically, the head's low point falls below the left shoulder's low point.

General outlook , source

Right Shoulder: There is another rally after the head, but it is not as strong as the last one. This makes up the right shoulder, and it usually doesn't rise higher than the head.

Neckline: The neckline joins the high points of the two shoulder peaks, following the conventional pattern. It serves as a barrier that, when breached, validates the pattern.

Confirmation: The pattern's validity is supported by a breakout above the neckline and rising volume, which points to a possible trend reversal from the downward to the upward direction.

Trading view

An indication of a change in market mood from negative to bullish is the inverse head and shoulders pattern, which is seen as bullish. Because it presents a buying opportunity, traders frequently search for this pattern. Their targets are determined by measuring the distance between the head and the neckline.

Honestly, I am still learning about using chart patterns for Steem's technical analysis. Right now, I have not had the chance to put it into practice, but I'm eager to learn more.

Analyzing historical price movements to forecast future ones is the process of using chart patterns. It's similar to joining dots on a graph to look for patterns. However, it's not always accurate; occasionally the trends break and the market surprises us.

Chart patterns are one component of the jigsaw, but one that could be helpful for Steem. It's crucial to take into account news, market mood, and other elements. Bringing all of this information together makes decision-making easier.

Thus, even if I'm still getting the hang of it, I think that utilizing chart patterns in conjunction with other analysis techniques can offer insightful information on how Steem's price moves.

In conclusion , even though I am still learning how to use chart patterns for Steem technical research, I see its potential value in addition to other analytical tools. Although chart patterns might provide information about future price movements, for a more complete picture, one should also consider news and market mood.

With continued skill and knowledge development, my goal is to successfully incorporate chart patterns into my analysis to support well-informed trading and investment decisions on Steem.