U.Today is slowly but surely recovering, with the price stabilising around the $56,000 level. Unfortunately, the purchasing power is not there and the market clearly needs another boost. The so-called “bullish megaphone” pattern could be the answer.
The bullish megaphone pattern usually indicates that there is a possibility of a significant rise in technical analysis. This pattern, also known by another name, consists of two diverging trend lines, one sloping downwards and the other ascending, which gives the chart the appearance of a megaphone.
Price movements expand between the two trend lines, which shows an increasing degree of volatility characteristic of this pattern. It usually develops after a sideways trading or consolidation phase, indicating that the asset is preparing for a breakout. Here's how it works:
Formation: As prices fluctuate between higher highs and lower lows, the pattern begins to take shape. A megaphone shape occurs when price swings become larger than the previous one.
Increased volatility: Volatility increases as the pattern develops. As price movements increase in magnitude, the market frequently becomes confusing and uncertain. An important aspect of the bullish megaphone pattern is its increased volatility.
Breakout: The definitive breakout of this pattern is its defining characteristic. This breakout typically occurs through the upper trendline of a bullish megaphone. The breakout, which is supported by increased buying interest and increased trading volume, denotes strong bullish momentum.
Target Price: After the breakout, the target price is usually determined by measuring the height of the pattern at its widest point. The possible upside is calculated by adding this measurement to the breakout point.
This article was originally published on U.Today
