- Triple & double tops and bottoms
Triple or double top and bottom chart patterns are exactly what they sound like; when prices ricochet off the same resistance (top) or support level (bottom) two or three times consecutively.
Both triple and double patterns are reversal setups and typically signal prices are about to head in the opposite direction. A double top, for instance, is when a crypto asset is in an uptrend and prices meet a strong resistance area. During the first visit, prices bounce off it and break lower temporarily before quickly rising back up. Upon the second visit to the same resistance level, prices are forced down much stronger than before and a new downtrend begins.
If prices break above the resistance or below the support at any point, the pattern is considered negated and a price continuation will likely occur instead of a reversal.
- Ascending/descending triangles
Ascending and descending triangles are known as continuation chart patterns (bullish and bearish, respectively). An ascending triangle, for example, consists of a flat line connecting the recent price highs and a diagonal line connecting the higher price lows.
These appear when bullish traders get rejected at the same resistance level on multiple occasions but retreat less after each attempt until eventually, the price breaks through. The same goes for descending patterns, where sellers eventually overcome base support after a number of pushbacks and prices continue lower.
- Head and shoulders/inverse
Head and shoulder setups are another type of reversal chart pattern characterized by three sequential price peaks. Two smaller peaks (called “shoulders’) sit on either side of a much larger, middle peak (called the “head”). The lower lows of each peak can usually be connected by a flat line, known as the “neckline.”
Once the last shoulder forms and returns back to the neckline, the price breaks out. When all three peaks point upward, the pattern signals a bearish reversal is likely to happen. When all three peaks point downward, it’s known as a bullish inverse head and shoulders pattern and suggests a new uptrend is about to begin.