You know, I've been following technical analysis for a long time, and here's what I find interesting — most traders get fixated on the same patterns, but there are more rare, yet very useful models. For example, the dragon pattern. Honestly, when I first heard that name, I thought it was some kind of joke, but then I realized it's actually a powerful tool for spotting reversals.

The dragon pattern structurally resembles a double bottom, which everyone knows, but it has its own twist. Imagine: the price drops, forming the first low — that's the first point, then it rises a bit, forming what is called the neckline, then drops again roughly to the same level, creating a second bottom. After that, the price breaks above the neckline — this is the moment when the dragon pattern shows its strength.

This works especially well in crypto. The market is volatile, reversals happen often and sharply, and when you see a classic dragon pattern on the chart after a prolonged decline — it often means the bears have exhausted their strength. I’ve noticed that such moments often coincide with the start of a strong upward movement.

So, how do you use this in practice? First — you need to find this pattern at levels where the price has bounced many times before. Don’t catch it randomly on the chart. Second — wait for a breakout of the neckline, this is critical. I’ve seen many traders enter too early and get stopped out. Third — when the breakout happens, it’s a signal to go long.

Let’s take a hypothetical example with Bitcoin. Suppose the price dropped to 60,000, then rose to 65,000, and dropped again to 60,500. That already looks like a dragon pattern. When the price breaks above 65,000, traders who are watching it could open a position targeting 70,000 and higher. It’s logical to place the stop slightly below the second bottom.

But there are nuances that are important to understand. False signals happen often, so I always look at trading volumes and additional indicators. In crypto, prices can change sharply, and sometimes you see patterns that turn out to be false. Another thing — the psychological aspect. Traders often see what they want to see and start finding the dragon pattern everywhere where it’s not. It’s better to double-check than to open a position on a false signal.

In general, the dragon pattern isn’t a magic wand, but if you use it together with other tools and approach it critically, it can become a useful part of your arsenal. The main thing — don’t rush and wait for confirmation.