[TP Academy ⑫] "Buy at the knee, sell at the shoulder"... Chart pattern signals indicating a top

For investors shaken by the noise in the cryptocurrency market, ‘TokenPost Academy’ with 8 years of on-site experience will provide a true investment benchmark. We invite you to embark on a seven-stage master class journey that replaces “feelings” with “data,” “luck” with “strength,” and challenges the top 1%. [Editor’s Note]

“High mountains and deep valleys.”

This is an ancient adage in investing. There are no assets that rise forever, nor assets that fall forever. Traders’ dreams are to catch the moment when a trend reverses, that is, to seize the “reversal” opportunity. The market will signal the end of a trend in a friendly manner through specific “patterns.”

◆ Sell at the shoulders: Head and Shoulders

This is the most representative bearish reversal pattern. As the name suggests, it resembles a person’s “left shoulder, head, and right shoulder.” The principle is as follows: after the price reaches the head (highest point) and pulls back, it attempts to rebound again, but due to exhausted buying power, it fails to break the previous high and reverses (forming the right shoulder).

At this point, the key is the “neckline” connecting the lows of both shoulders. Once this support line is broken, it should be regarded as the end of the upward trend and the establishment of a short position. “Selling at the shoulders” means selling after confirming the peak (head) when a reversal forms at the right shoulder.

◆ Solidify the bottom: Double Bottom

Conversely, at the end of a downtrend, a ‘W’-shaped double bottom pattern often appears. It manifests as the price bottoming out, rebounding, then falling back again but not breaking the previous low and successfully holding. This indicates weakening selling pressure and that buyers are waiting for solid demand. When the price breaks through the high point in the middle of the W pattern, it is a strong buying signal.

◆ The key to distinguishing authenticity — ‘Volume’

However, large funds sometimes use these patterns to deceive retail investors by reversing the trend. For example, a false breakout with a slight dip below the neckline followed by a quick rebound, known as “fakeout” or “trap.” To avoid being fooled, it is essential to confirm the “volume.” When the pattern completes and breaks through the key line, it must be accompanied by significantly increased volume compared to usual. A breakout without volume is likely a false breakout.

Although charts are lagging indicators, patterns can serve as leading indicators after condensing market participants’ psychology. Do not predict; instead, “confirm” the completion of the pattern and respond accordingly. That is the true path to avoiding losses in investing.

👉 [Practical Patterns] Not only head and shoulders but also wedge, flag, and other chart patterns that bring profit are comprehensively analyzed. TokenPost Academy’s ‘Stage 4: The Trader’ course helps you develop the eye to read charts.

( Sign up now: )