I've long noticed that candlestick patterns are one of the most useful tools in technical analysis. They help understand what’s happening with the price and when a reversal might occur. But there’s one pattern that many overlook, even though it can be quite powerful — it’s the dragon pattern.

This dragon pattern looks similar to the well-known double bottom, but with some interesting features. The essence is that two lower points form on the chart, connected by an upward line called the neck. The first bottom appears during a downtrend, then the price rises, forming this very neck line, then falls again to roughly the same level, creating a second bottom. And when the price breaks above the neck line — it often signals a trend reversal and the start of an upward move.

For crypto trading, the dragon pattern can be a particularly useful tool because the crypto market constantly experiences sharp reversals and high volatility. After a long decline, such a pattern may indicate that the market is ready to turn upward. I’ve seen several examples where the dragon appeared exactly when a bullish move was beginning.

How to use this in trading? First, look for the pattern at key support levels — where the price has often bounced before. This increases the reliability of the signal. Second, don’t rush to open a position immediately after the second bottom forms. It’s better to wait until the price actually breaks the neck line — this will be a more reliable confirmation.

Let’s take Bitcoin as an example. Imagine that after a prolonged decline, the dragon pattern forms on the chart. The first bottom is at $60,000, the neck line passes through $65,000, and the second bottom is close to the first, around $60,500. When the price breaks above $65,000, it’s a signal to open a long position. Take profit can be set at levels of $70,000 and higher, and a stop-loss just below the second bottom to protect against false signals.

But here’s the catch: the dragon pattern can give false signals. The crypto market is unpredictable, prices jump sharply, and sometimes what looks like a dragon is just noise on the chart. That’s why I always combine this pattern with other indicators — volume, oscillators, support and resistance levels. Psychologically, it’s also important not to see dragons everywhere where they aren’t. Better to miss a few signals than to open a position on a false one.

In general, the dragon pattern is an interesting tool for the crypto market, but not a magic wand. Use it as part of your system, combine it with other analysis methods, and your results will improve.