What is a Blow off Top in Trading? | Chart Patterns

3개월 전

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Trading is a very broad profession, there are many ways to analyze and read a chart, which makes life easier for the investor in a certain way, however, outside what is a traditional and basic "Technical Analysis", there are relatively advanced chart patterns and very difficult to trade that can be very profitable for anyone with some experience in the market.

In that sense, I come here to bring you one of these patterns that usually happens frequently and that you investors/analysts could in some way take advantage of and study according to the guidelines that I will detail in the course of this publication. Be careful, this is not an investment recommendation, I am just an investor who provides education through platforms like this and of course it is very helpful to the community since we basically work and perceive Cryptomoney.

What is a Blow Off Top?

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This is an advanced type of charting pattern, where a rapid and violent price movement occurs with a large volume of trading, followed by a fall of equal or similar proportion to the price rise. Usually the abrupt price movement happens in an upward direction, although you can hear and see it easily on the chart, the truth is that it is not easy to trade it, because, at the slightest error on our part, it can bring significant losses to our trading account.

These sudden movements, also called bump stops, can happen in any market, either:

  • FOREX
  • FUTURE
  • ACTIONS
  • RAW INGREDIENTS
  • CRYPTO-CURRENCIES

Key aspects to operate it

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  • The price movement that triggers these strong movements can occur either from high impact news around the asset, speculation or coordinated movements of the strongest market players (Whales).

  • Basically this price rise is accompanied by a large volume of trading, as well as its fall, this can be a very good signal to detect this pattern.

  • We must be very clear that when the fall of prices occurs, it does not happen immediately, because it can last even weeks or many times 4 or 5 days until the fall of prices begins with a large volume of negotiation and dimensions very similar to the upward movement.

  • When the abrupt price increase happens, there are no "Pullbacks", in short, the price rises so vertically that there are no breaks in the price, this could tell us as investors that, we are facing a probability of a "Blow Off Top" pattern.

Blow Off Top graphic example

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Final recommendations

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Recognizing each of these key aspects that I mentioned above could identify a pattern of "Blow Off Top", we must also be very careful when operating it, as we can lose a lot of money if we do not identify well the areas where we are. As always and to leave this publication so far not to make it so long and tedious, I will soon be launching the next parts of the open sections in my blog, plus varied content regarding patterns or indicators that I usually use to trade the financial markets.

Note: I am gathering a team of market traders, in order to analyze and trade together, making team is easier to see all the opportunities that this gives us to obtain greater profitability and consistency. If you are interested contact me, until a next post.

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Hi @lenonmc21 great post buddy,trading is really broad profession for many of us. In this post you
explained everything well and easily understand able to everyone.thank you for this great post brother.

Hello friend a publication very educational, which in particular I find very valuable, I will take into account some aspects you mention, as part of the learning I try to acquire. Thank you for sharing your experiences, have a great weekend !