The BEST Pattern To Trade Bitcoin

When you think about entering a trade, you must always think about an inflection point. An inflection point is a spot where you can get into a currency where the risk is low. Everything in trading is based on setups. A setup is a list of conditions that must trigger before a trade is taken. Before taking a trade, you have to build pieces of evidence in your favor before its worth putting in that trade. As traders we can minimize this by thinking about patterns.

When you’re in a trade, there are literally dozens of variables you must compute in an instantaneous basis, which is impossible. By taking these variables and stereotyping them into patterns, we know the case has been built. By identifying and waiting for them, you can get into a trade where your risk is low but capture big moves.

The Flag Pattern

My favorite swing trading pattern is what we call a flag pattern. A flag pattern is a pattern that you trade once an initial thrust has begun. After a currency comes out of a range, you’re looking for that first consolidation. A consolidation is some type of sideways move where the price range has been tightened. This range allows you to enter with reasonable risk to reward and play the next run. This range will usually take 3 to 10 days to rest and build energy. Within your flag pattern, draw your trend lines across the top of the range. Then wait for at least 3 tests of that trendline for it to be a go. When the stock starts to break the top of that range and you have the 9 EMA riding up under it, the pattern is ready to pop. Buy the currency with a stop right under the EMAs.

Remember, the flag patterns need to be tight and clean. If not, they become messy and hard to predict. But over time, they start to develop a range. Additionally, wait for the currency to test the resistance. The more times the currency tests this level, the more powerful the breakout is going to be.

Intraday Trading

The rules for day trading and swing trading are fairly similar. When day trading, you can use these same type of patterns. When you see a clearly defined resistance level, you must have three tests for the currency to breakout. When you have a resistance level test for the 3^rd time with the 9 EMAs riding beneath it, you want to see the currency break with the 9 EMA right under it. What that does is provide extra protection while also giving you the signal that this thing is ready to go now. When it goes, you’re going to buy as it breaks the trend line. Put the stop under the 20 MA and your off to the races. The key to all trading is waiting and hunting for the patterns. Remember this flag pattern as a go-to setup in a momentum market and it can serve you very well.

Below is a video that will walk you through everything in this article.