GATE.IO AMA - K-line Patterns for Uptrend

Q: Today let's study more about candlesticks' combinations, how to use it to analyze the trend.

A: Ok, let's go to the details.

Downward Acceleration Combination

The Downward Acceleration Line refers to the combination of candlesticks in which the price or index declines more and more during the downward process.

1）Technical characteristics of Downward Acceleration Combination

Appearing in falling pattern.

At the beginning of the decline, the speed of decline is slower, and then the speed of decline is getting faster and faster, and continuously the mid-length and long solid bearish body appearing.

2）The technical meaning of Downward Acceleration Combination

Downward Acceleration Combination is the bottom signal that shows the reversal pattern directing to uptrend.

3）Examples of real BTC orders

In the Sept.18th BTC market, BTC fell from US$48,000 to US$39,800 in 3 days. During this period, the decline accelerated continuously, with a drop of 18.2%. In the end, it stopped falling and stabilized at around 40,000, and quickly ushered in a rebound, with an increase of about 13% to 45,000 US dollars in 2 days.

4) Special Note

When there is a Downward Acceleration Combination, the price may touch the bottom and bounce up, but it may not rebound immediately. When a trader sees it, it is not advisable to enter the market immediately. Watching more and moving less is still the best choice. Traders who already hold positions can hold on and keep on observing. After Downward Acceleration Combination is moving to the end, the price rebound is a high possibility event.

Morning Star

Morning Star is a combination of three candlesticks. The first one is the bearish body, the third is bullish Doge that penetrates into the first bearish candle body, and the second is the smaller bearish or bullish body that below the 1st and 3rd candle bodies.

As shown below:

1) Technical characteristics of Morning Star

Appears in a downtrend

It consists of three K-lines, the first one is bearish body, the second one is low open small bullish body or small bearish body or Doge, and the third one is bullish body.

The third candle body goes deep into the first candle body.

2) The technical meaning of Morning Star

Morning Star is a bottoming reversal signal, and the market trend is bullish.

Morning Star indicates that the light has arrived, and its name itself already contains the meanings of bullishness that rise from bottomness. It is a relatively common signal of a turning trend.

In Morning Star K-line combination, the three K-lines have perfectly reflected the short-term trend reversal process defined in the Dow Theory: the first bearish body is the lower low than the previous low, and the second bullish body has stopped falling. Sorting out, the third bullish line is the post-high higher than the pre-high.

3) Examples of real BTC orders

In the Aug.13th BTC market, the currency price fell from 46,000 US dollars to 44,000 US dollars, a decrease of about 6% in one day. After that, the price of Morning Star rose to 48,000 US dollars, which is close to a 10% increase in one day.

4) Special Note

The more the bullish bodies penetrate into the bearish bodies, the stronger the reversal signal effect will be.

The smaller the volume corresponding to the first candlestick and the larger the volume corresponding to the third candlestick, the more reliable the signal is.

If there is an upward gap between the second candle body and the third candle body, the probability of reversal trend is greater.

Flat Bottom

A flat bottom is a combination of two or more candlesticks whose lowest prices are the same in a downtrend.

As shown below:

1) Technical characteristics of Flat Bottom

Appears in a downtrend

Composed of two or more K lines

The lowest price is at the same level

2) The technical meaning of Flat Bottom

A Flat Bottom is a bottoming signal. The more candles that touch the lowest price, the more reliable the bullish reversal signal will be.

However, if there is no support of other bullish candlestick patterns and trend analysis signals, Flat Bottom cannot be used as a ONLY buy signal.

3) Examples of real BTC orders

In the Jul.20th BTC market, from $58,000 on Jul.10 to $30,000 on Jul.20, BTC fell by about 50% in two months, forming a cut in price. It repeatedly touched the bottom around 30,000USDT and formed a Flat Bottom pattern, and then pulled up strongly to start the second swing of bull market.

4) Special Note

Several candlesticks with the lowest price at the same point can be close to each other, or there can be gaps between them. However, there should not be too many candlesticks in the interval, and too many candlesticks will no longer be a Flat Bottom pattern.

Three White Soldiers

The Three White Soldiers closed three new highs in succession at the early stage of the upswing or after the sideways.

As shown below:

1) Technical characteristics of Three White Soldiers

Appears in the early stage of uptrend or after sideways

It is composed of three consecutive small bullish candles that hit a new high.

2) The technical meaning of Three White Soldiers

Three White Soldiers are buying signals, and the market trend is bullish.

The emergence of Three White Soldiers after the current price bottomed out or went sideways, indicating that the multi-party is accumulating energy and preparing to make a big move. If the current price rises after Three White Soldiers, and the transaction volume increases simultaneously, it means that new investment are involved, and the possibility of continuing to rise is even greater. Traders can follow up in time and buy in moderate manner.

3) Examples of real BTC orders

In the Jul.20 BTC market, after more than two months of decline, the price stabilized and rebounded after reaching 30,000 US dollars, and then out of Three White Soldiers pattern, starting the second wave of uptrend market.

4) Special note

The strength of Three While Soldiers' lifting effect is closely related to the following factors:

At the end of the finishing pattern, break the finishing pattern and go upwards.

The trading volume is released steadily, showing a coordinated relationship between volume and price in which price increases and volume increases.

Every Bullish candlestick closes at the highest price or the second highest price

Summary

The four bullish candlestick combinations mentioned in this AMA is the highest frequency and the most widely used in practice.

In addition to K-line pattern, they can be combined with the tools such as trend lines and technical indicators to filter out invalid signals and to increase winning percentage.

Disclaimer

This article is for reference only.

Such information provided by Gate.io does not constitute any investment advice and is not responsible for any of your investments.

Regarding technical analysis, market judgment, trading skills, trader sharing, etc., may involve potential risks, investment variables and uncertainties.

This article does not provide or imply any opportunity to guarantee profits.