Bitcoin Consolidation Patterns in Bitcoin Trading

Due to the nature of bilateral or consolidation patterns, the Bitcoin market retains the potential to move in either direction. Two primary categories of consolidation trading patterns develop on Bitcoin Cryptocurrency price charts:

• Symmetric Triangles - Consolidation chart patterns
• Rectangles - Range market

Symmetrical Triangles - Consolidation Patterns

Symmetrical triangle patterns on charts often act as consolidation setups.

Symmetric triangles are chart setups with converging trend lines which form a consolidation phase. The buy signal from a symmetrical triangle pattern setup is the upside break, while a downward break is a trading sell trading signal. Ideally, a market breaks-out from a symmetrical triangle prior to reaching the apex of the symmetrical triangle.

Bitcoin Price Trend lines can be drawn by joining these lows and highs of the consolidation setup, the trend lines formed are symmetrical and converge to form an apex. A breakout should occur somewhere between 60-80% into the triangle chart pattern. An early or late break out is more liable to fail, & therefore less reliable. After a price breakout the apex forms support & resistance areas for the market price. Price that has already broken out of the triangle trading setup should not retrace past the apex level. The apex level is used as a stop loss setting area for the open Bitcoin trades.

When these setups for putting things together show up, it means the Bitcoin market is stopping for a moment. It's like it's thinking before it decides which way the market should go next. These setups happen when buyers and sellers are fighting, and the market can't pick a direction.

Consolidation Chart Setup

But, this pattern of getting smaller can't keep happening forever, just like when you play tug of war and one team eventually wins: look at the price chart below and see how the pattern broke out and went in a direction. How can we be sure that we are on the side that will win?

Consolidation Pattern - A downward breakout signals a Sell after a Consolidation Pattern.

Consolidation Pattern - Buy trading signal following a breakout upwards after a consolidation pattern.

Now back to the question, how do we make sure we are on side that is winning?

Wait for Bitcoin price to cross a line. Then place buys or sells that way. After a pause, a break above buys: below sells.

If you prefer not to wait for a consolidation pattern setup, you can place pending orders instead. For more details on pending orders, refer to the lesson on stop entry order types.

The 2 types of stop orders used to trade Bitcoin consolidation setups are:

Buy Entry StopAn order to open buy at a point above the market price

Sell Entry StopAn order to sell at a point below the market price

These orders start a buy position above the current market or a sell below it. They trigger at a set price outside the current level.

Rectangle BTCUSD Setup

A rectangle consolidation setup pattern is a zone with small price changes, making a consolidation time in the Bitcoin prices market. The price zone has two parallel lines showing where the price usually goes, and these lines are flat, showing support and resistance. This rectangle chart pattern is marked on a trading chart with a rectangle, so it is called a rectangle pattern setup.

In this consolidation pattern, prices create multiple peaks and troughs that can be connected with parallel horizontal lines. This rectangle pattern typically forms over a protracted timeframe, resulting in its distinct shape.

A breakout happens when price crosses a horizontal line. The rectangle range breaks too. An up move signals a buy. A down move signals a sell.

Rectangle Pattern - Bitcoin Trading

Bitcoin's price goes out of the steady range after a while and keeps going up after the market price breaks out going upward.

Get More Courses & Tutorials at:

• Types of BTC USD Trade Setups
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• What's BTC USD Trade Market Psychology?
• How Do You Add Trading BTC USD Trading Indicators on the MT5 Platform?