Technical Figures 1: Triple Bottom and Double Top

Triple Bottom and Double Top
Triple Bottom and Double Top

August is usually a month with a low trading volume and this first week is a clear example of it, since we have experienced a week without major changes in the tokens with the highest capitalization of the crypto market, in which $BTC has moved in a range between the resistance of $24k and without getting close to the support of $20.7, which leaves a scenario without major changes.

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Taking advantage of this summer situation, I want to delve into the topic of patterns and technical figures that we have been discussing in previous analysis, to explain clearly how they are structured, how to identify them and what movement we can expect after their confirmation.

The first figure I want to comment on is this double or triple bottom that we mentioned in $BTC and that fulfilled part of its objective.

The double or triple bottom figure is detected in support zones, when the price bounces two or three times in the same area. One of the first ” signs” that we can detect in these formations is the creation of bullish divergences of the RSI in the second or third supports to the support zone, which warn us of the possibility that this figure is created, but it is not confirmed until it does not manage to make a higher high than the highest high that has been created between the supports, as we can clearly see in the image.

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Once we detect the confirmation of the figure, we can expect a movement of the same size as the dimensions of the lateral channel generated in the support zone, although they do not always meet 100% of the target.

In these formations there are also usually pull-back movements after the confirmation breakout, as happened in the case of $BTC.

These figures are trend change formations, but depending on the size of the movement we can foresee a main trend change movement or simply a short-term trend change, but not changing the main trend of the asset.

In the case of the example in $BTC, the dimension of the figure is relatively small compared to the volatility of the asset, so we could expect a reversal movement that would break the accelerating trend, but not because we can expect the main trend to change because this triple floor figure has been created.

This formation has its antonym in resistance zones, and it is called double or triple top. It is detected by generating two or three supports in a resistance zone, which subsequently generate a lower low than the low created between the supports. I give you a graphic example that occurred in the $ONE, the Harmony token, which created a double top and unlike the triple bottom that I mentioned in $BTC, it does have a large dimension and did generate a change in the main trend.

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As we can see in the image, the double top figure is generated in a longer time period and with a much larger percentage dimension than in the triple bottom example.

In this case, a divergence in the RSI is also detected, which generates a lower high in the resistance zone, to later create a lower low that confirms the figure.

The target of this figure is also the same dimension as the distance between the resistance and the low created between the supports and is measured from the point of its confirmation.

In this case the trend of the asset has changed and more than 80% of the target has been met.

These formations are quite effective at long periods, but lose probability of success in short periods such as 5 minutes or 15mins.

We will continue to deepen in how to detect the technical figures in the following posts and if you have any questions you can indicate it in the comments.

Finally, remember that nothing discussed in our articles can be considered as investment advice, everyone must do their own analysis and develop their own trading strategy. From the Belobaba Crypto Fund team, we only show our analysis and investment tools, and how they help us in our operations when making decisions.