What do crypto traders call the Bart formation and how to trade it?
The Bart Formation, or just Bart, is a colloquial name given by crypto traders to a chart pattern that is also sometimes called “pump and dump”. The cryptocurrency rallies sharply, usually on a shorter timeframe like 30M, and after a pretty much flat period retraces all of its previous gain. The name Bart came from the pattern’s likeness to the shape of Bart Simpson’s head.
On bitcoin markets, the Bart occurs mostly after a long periods of sideways when the traded volumes decline and nothing is happening. On altcoin markets, where thinner books are normal, you can still see Barts quite often.
The idea behind the Bart pattern is that there was an attempt to start a markup in the market, by a single actor or by means of organic uncoordinated speculation, but that attempt did not catch on. It is therefore a signal of market weakness.
The Inverse Bart formation
Sometimes referred to as “traB”. Alernative name would be “poop and scoop”.
Alternative names for Bart formation
Pump and Dump.
Trading the Bart Pattern
Bart pattern is always a “failed attempt” at something: Either a failed attempt at starting a run-up after a sideways period, or a failed attempt at building a bottom after a down trend.
Quite typically, crypto markets will show bart patterns at the end of a channel or triangle formation that has been in the making for a few weeks.
Ends of triangular formations are in particular a good place to spot bart formations, because the volume there is getting lower - a lot of traders go to the sidelines, waiting for a decisive move.
The same is also true at the end of a bear market or when the market was ranging for so long that everyone is bored and nobody wants to trade.
Does that make the Bart formation after a flat period a good place to long?
Only if your risk tolerance is high.
Remember that Bart is a failed attempt at starting a run-up. There was some follow through, but not enough yet. The market needs to build up the momentum a little longer, and in the meantime a fundamental event can happen that changes everything … In other words, there is no way to time the market from the presence of Bart patterns alone.
However, it does show some early confidence on the market.
So, those are the options:
- If the market is failing to establish bottom, it is too early to be bullish. You may have better odds in short-term short positions, but you need to consider other technical analysis, such as support and resistance lines.
- It is a super bad time to speculate with futures or any other time-limited contracts. With plain leverage though, the story is different. You could use contracts like the Bitmex perpetual swap to try and catch longing the next Bart. Shorting it is more risky if the overall structure of the market looks like slowly setting up for a run-up.
- If there is a Bart on the hourly charts but you are normally looking at the D and W charts and your opinion there is bullish, you could buy spot for the mid- to long-term.
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