I've noticed that many beginners in crypto overlook interesting candlestick patterns that can provide a good entry signal. For example, the dragon pattern is a rare one, but when it appears, it often signals a trend reversal. Structurally, it resembles a double bottom but with some nuances.

What does this pattern look like? Imagine: the price drops, forming the first bottom point (the first dip), then rises to a certain level (the so-called neckline), then drops again, but not much lower than the first bottom, forming a second dip. After that, the price starts to rise and breaks through the neckline — this is the signal. The dragon pattern indicates that the downward trend is ending and an upward movement is beginning.

This is especially useful for the crypto market because volatility is off the charts and reversals happen frequently. But blindly trusting a single pattern isn't advisable — additional confirmations are needed.

How do I use this in practice? First, I look for the dragon pattern at support levels where the price has previously bounced. Second, I wait for the price to definitively break the neckline — this is the main signal. The entry point is at the breakout, with a stop-loss placed just below the second bottom, and I target nearby resistance levels for take-profit.

A real-world example: suppose Bitcoin drops to 60,000, then jumps to 65,000, retraces back to 60,500 (the second dip), and then breaks above 65,000 upward. That’s when I enter, aiming for above 70,000. Those who caught this dragon pattern profited nicely.

But there are pitfalls. First, false signals — the pattern might not work, so I always look at volume and oscillators. Second, crypto is not the stock market; prices can move sharply at any moment, and the pattern can fall apart. Third, psychology — it’s easy to start seeing dragons everywhere where they don’t exist. So I don’t rush into entries until there’s clear confirmation.

In general, the dragon pattern is a decent tool for spotting reversal points, but only when combined with other tools. It’s not a cure-all, but definitely worth having in every trader’s arsenal.