Understanding Trends II - Crypto Academy / S5W3- Homework Post for @reminiscence01

The market structure is the technical appearance of a market. It shows what is happening between buyers and sellers in a trend. In a bullish trend, the market structure maintains a series of higher highs and higher lows while it maintains a series of lower highs and lower lows in a bearish trend. A break in the market structure of a bullish trend occurs when the market fails to continue creating a rhythmic higher high (Hh) and higher low(Hl) while the break of market structure of a bearish trend occurs when the market is unable to continue maintaining rhythmic lower highs(Lh) and lower lows (Ll) in the market: This means that after previous unsuccessful attempts, buyers suddenly took control of price action though the sellers are still on buyers tail.
Market structure shows activity and direction in a trend while consolidation shows activity without direction.
Market structure (Bearish reversal)
The chart above is a BTC/USD chart. It is a bullish market structure and has successfully maintained a series of higher highs (Hh) and higher lows (Hl). Price gets to a point where it is unable to maintain the higher lows. This shows bearish momentum coming in to trigger opposite movement of price. The point where the bullish market structure broke sees sellers creating a reversal in trend.
Market structure (Bullish reversal)
The chart above is a 12-hour BTC/USD chart. It shows a bearish market structure where the bears dominate while defining a series of lower highs and lower lows because of their momentum at the time. However, at the tail end of the trend, we see that the market structure is broken. This is so because we see that there is a high low where there is supposed to be continuation of a lower low. This ushers in a trend reversal as we can see on the chart.
Trendline
The trendline is an indicator that functions as a dynamic support or dynamic resistance. The trendline gives a trader awareness on the point of price rejection and support In a market. It shows the diagonal limit of the bulls and the bears despite the dominance of any of both parties at a given time. That is to say once price hits the trendline, it is bound for a rebound, however failure of price to rebound after hitting the trendline is termed break of trendline. This eventuality can be a very strong signal for a trader to take profit and enter a new trade.
In the 1-hour BTC/USDT chary, we can see that the price is responding to the trendline. Buyers are met with stiff opposition at trendline; thus price would continue to set sail downwards once it hits the trendline. However, we can see that this dynamic resistance is broken at the break point. This automatically ushers in a bullish trendline reversal.
The above chart is a 4-hour Trx/BTC chart. It features a bullish trend which is marked by the trendline. The trendline in the chart shows us where price is continuously supported. Price continues to hit the trendline at higher lows after which it bounces off to create a higher high. A trend reversal, however, becomes imminent when price suddenly breaks the trendline and goes somewhat below the trendline. This shows that sellers are suddenly having the upper hand even though price still tries to show it can still obey the trend, then bam, a full bearish trend reversal is in effect as expected.
Divergence

Divergence is contradiction between the action of price in the market and an indicator such as Relative strength index (RSI), Commodity channel index (CCI), Stochastic indicator, momentum indicator, and Moving Average Convergence Divergence (MACD) indicator. Divergence negates the visual presentation of a trend as it identifies the actual momentum of buyers and sellers that may not be readily seen: it shows when buyers and sellers are losing or gaining momentum. Divergence is a short-time frame forecast by indicators, thus notifying traders to what is taking place in the market that has not yet been observed on the chart.
Bullish Divergence
In the 4-hour BTC/USD chart above, we can see that price is moving downwards forming lower lows while the RSI is saying otherwise. This shows us that sellers are exhausted and buyers are about to take over price in the market. This gives way to the occurrence of a bullish divergence and is a signal for a trader to take profit and seek a new long entry.
Bearish Divergence
The price action on the 12-hour chart indicates higher highs while the RSI indicates lower highs. This entails that what seems to be a successful uptrend is actually a preparation of a bearish take over of market price. As we can see, there is soon a bearish divergence as indicated by the RSI. Identification of this enables traders to take profit while seeking a new short entry.
Double Top
A double top is a double bullish peak that occurs in a market. It is an M-shaped persistent bullish reversal pattern. A double top entails that the bulls are unable to push price beyond a fixed limit even after showing strong momentum at the expiration of a momentary sell-off. The second peak gives credence to the first peak, indicating that the bears are strongest at a particular point as they take advantage of the exhaustion of the bulls.
Double tops, when correctly identified are powerful bearish reversal signals. At the peak, traders are taking final profits while seeking a new short entry. A second top that is significantly higher than the first invalidates a double top even if there is the occurrence of a trend reversal because such occurrence are not established as trend reversal patterns and therefore are less than 50% significant.
The chart above is a 12-hour Trx/BTC chart. Here we can see that price hits the first bullish peak before receding. Afterwards price returns like an angry bull to retest the same position as the first but is again resisted. This shows that at that point, price is most resistant because of exhaustion of bullish momentum, and thus is a strong indicator of a bearish reversal.
Double bottom
The double bottom is the opposite of the double top and is a strong bullish reversal pattern. The double bottom is a w-shaped technical pattern that appears in the market following a two-time rejection of lower price at a particular position: hence the reason for the W pattern. The double bottom shows that the market continues to gain support within a particular range of price, indicating that the bulls are strong at that position. This gives way to a double rebound, forcing what should be a continuous downtrend to be reversed upwards. When identified correctly, this is a very strong bullish reversal pattern.
In the 2-hour BTC/DOGE chart above, we can see sellers pushing price downwards at the first leg of the W before touching the first bottom which is the first point of support for buyers. Price heads back for the neckline before heading downwards again as if to break the point of support but is again supported by buyers. Two unsuccessful attempts by sellers to push price below a certain limit gives rise to the double bottom on the chart. We can see that a bullish reversal occur at the point of convergence at the second bottom, which is the most significant bottom among the two bottoms.