All language subtitles for 2. How to Trade Breakouts With Double Top and Bottom Patterns

Hello and welcome back to cryptocurrency trading masterclass by a wealthy education in this video,

we'll talk about how to trade breakouts with double top and bottom patterns.

Now, a double top or double bottom is exactly what it sounds like.

The market goes down and it bounces from the same general spot a couple of times.

That's a double bottom.

If we rally a couple of times and find selling pressure in the same area, that's a double top now.

There are a lot of things to read into this.

Number one, there's a lot of support or resistance when you see this.

So there's a whole slew of ways that you can go about trading this.

Sometimes a failed pattern is actually a great pattern.

And I'll explain that here in a second, because you have to think of it this way.

When the market was falling, buyers came in and aggressively pushed the market back up, just as when

it was rallying, plenty of sellers came in to push it back down.

So typically.

Like kind of double tap.

You would see something like this, and some people call it an image pattern, just as they would call

this a pattern and they would look at it.

Like, there's a little trigger point down here in the bottom of the M and they would take the measurement

and let's just say it's seventeen dollars and on a break down below there, the target is seventeen

dollars.

Typically put the stop loss about halfway through the pattern.

That can vary depending on.

You know, the personal traits of the trader, the risk appetite, that type of thing, but in general,

that's how most people trade it, just as right here you would measure this pattern.

Let's just say it's 100 dollars.

You turn around, you break above the top of the W pattern.

In this case, you aim for 100 dollars, you risk 50.

It's build in, you know, risk one gain to type of scenario.

But let me ask you this.

What happens if one of these patterns forms in the markets, instead of breaking down, they turn around

or break up?

Everybody that was shorting in this area is now in trouble and they're going to have to close.

Now, this doesn't necessarily give you a built in target, but what it does tell you is that the uptrend

is now continuing.

So that's something that, you know, you may use along with like a moving average system or Fibonacci

projection extension type thing.

It just depends on the circumstance, but a lot of people forget that a failed pattern sometimes is

a great signal in and of itself.

And I have a couple of examples I want you to take a look at, so.

Right here you have.

A double bottom, right?

And this is a reversal because we had started falling on the Bitcoin hourly chart, we did have this

long, which is a little bit of artistic license that needs to be put into play here.

That's why I picked this one, because it does show, OK, fine, there's a big wick, but it shows

a lot of support, right?

A lot of support here as well.

We broke the top of this pattern.

Remember, we're going to measure.

The top of the pattern, right?

So let's take that measurement.

Extend it out.

And we clearly hit it, we reacted and in fact, of course, went much further to the upside.

Here's something that's interesting, though.

So later on.

We ended up forming the same pattern and people are bullish on Bitcoin at this point, and I think this

is a great opportunity.

We are pulling back.

We form a double bottom in an uptrend.

Should be bullish, right?

Well, once you break down below that, anybody in this area that's long is now suffering again.

Unfortunately, you don't really have a built in target like you would measuring, but it does tell

you that something's changed.

And that in and of itself is pretty valuable information.

You know, you can try different things.

You can do simple support resistance in this case.

Thirty six hundred would have been previous resistance support and around figure that probably would

have made some sense.

But that's an example of how you can use a busted pattern.

So here on this etherial chart, this is actually a triple.

Bottom.

They do happen, they're not as common as double bottoms, obviously, because it takes so much more

to to make them happen, but they are even stronger signs.

And all that shows is that there are buyers here right around twelve hundred.

And the theory.

Clearly, we got our move based upon the neckline.

You extrapolate that out, you know, that's about where we stopped initially.

And then, of course, kept going.

Little bit of a double top there, it's a little slanted for my liking, you know, I tend to play the

body of the candlestick and that is pretty tilted if it's just a bit I'm not too worried about it.

But when it you know, it's a stretch to call that a double top certainly shows you the same thing.

It shows you that it's struggling to get above there.

But at the end of the day, you don't want to call everything you can a double top or a double bottom

or in this case, a triple bottom, which I think this one's pretty valid, a slightly tilted up and

not much.

This is a classic double top reversal signal here in Chain Link on the hour.

And what I like about this one.

That it's so clean and so obvious.

You can take the measured move.

And I went there almost immediately.

Another thing that I like about this is that it's right at the twenty five cent to 26 cents level,

you know, that's right where you'd expect from a psychological standpoint to see some resistance.

And you can see it was a nice move right back down to about 20.

So pretty straightforward, makes quite a bit of sense right now.

As I record this, there's a little bit of a double bottom that looks like it might be broken to the

downside.

So that could really get the market selling off.

There are other things you can pay attention to.

So, for example, I like the round figures, the twenty five cent, but a etherial.

You know, Luntz put.

A indicator or two on this and we'll talk about.

You know how that does possibly set you up for a train?

So here at this triple bottom, you starting to see the histogram suddenly explode to the upside on

a cross.

Now it was already over the zero line, but it is still a valid signal because of the cross and the

histogram exploding.

And that was a nice sign on the back.

The.

You could also put.

Your M.A., it's an hourly M.A., so I'd like to keep it tight with the nine, you can see it broke

above there.

That was a signal to get long right at the break, basically.

Here on this Bitcoin, actually, there's a couple different things that you can take a look at.

So, for example.

We're right at the thirty nine thousand level, so that should be support the fact that it got broken

and then back and retested.

Pretty significant, just as.

This was right at the 30000 level, so that's pretty significant from a psychological standpoint.

You can also do.

Take a look at the Bollinger bands, we pierced that a couple of times here, so we were getting a bit

overdone and we ran higher.

And again, it's just the whole plethora of reasons to trade these, these are probably a lot with triangles

and, you know, a few other major patterns which we'll talk about in the section.

There's a handful of patterns that the traders come back to time and time again because they prove to

have an edge.

They work over the longer term.

We could take these trades.

This is most certainly one of the favorites of traders.

And the next video, we'll take a look at trading head and shoulders patterns, ones that traders really

like.