Trading Patterns

Definition ∞ Trading patterns are recognizable formations or sequences in price charts that suggest potential future price movements. Analysts use these patterns, such as head and shoulders or double bottoms, to identify trading opportunities and forecast market direction. They are derived from the historical behavior of asset prices.
Context ∞ Trading patterns are frequently discussed in cryptocurrency news to interpret market sentiment and potential price trajectories. Analysts often point to the formation of specific chart patterns to explain recent price action or to suggest possible future market directions. The recognition and application of these patterns are a core component of technical analysis within the digital asset trading community.