Markets Can Be Chaotic
You're sitting in your favorite chair, sipping a drink while looking at cryptocurrency charts. For those that have been doing this a while, these patterns won't be anything new. However, it helps to review a few of the patterns that are used by traders in order to understand the psychology and terminology used in trading.
Support and Resistance
While this chart is from over a decade ago, it illustrates the principle well. Chart patterns recur in many different instruments over time, and even now you can see a similar example in the trends of your favorite cryptos.
Support and Resistance can be swapped due to price action - a level that had been resistance to price before it broke through often becomes support after the breakout. The inverse is true of support. If support is broken, it often becomes resistance to price after a downward move.
To put it more precisely, support and resistance are simply recent areas of price action that have "clumped" together. If you made a heatmap or distribution of price over time (market profile is a study that does this), then you'd see obvious "lumps" of where price spent a lot of time at different levels.
This reflects the psychology of trading where traders will put orders in at obvious even number prices, or other levels that are near recent lows or highs. It becomes self-fulfilling in that respect and that result shows in subsequent price action.
Pennants and Triangles, Oh My!
The above chart is another pattern that you'll see quite frequently when a market is "winding down" in action, or a trend of lower volatility. Cryptos for some reason LOVE making triangles, although it isn't a predictive formation on its own. Some triangles can break upwards or downwards from the end point, or "apex".
It works best in combination with other tools, like most technical analysis. What it does tell you, however, is that the market is winding up much like a spring, and when that potential energy is released - watch out! It is a good formation to keep an eye on as a new trader, because you will have advance warning that something is about to happen.
Crypto Trading Isn't Easy
While not a comprehensive list, the above chart patterns will help you understand when people refer to trends and other terms. Its all part of learning how to trade, which includes putting in the time to observe price in action and how these patterns evolve during the trading day.
Remember that while such patterns are useful, they aren't intended to be the only initiator of a trade plan or an automated strategy. A well-rounded toolkit is what makes a trader successful. You are on your way to your own path to personal wealth just by understanding these concepts!
Good trading!