Trading the Bart

What is a Bart?

By looking at a small time frame on an assets chart, one can identify sudden movements or ‘flushes’ in one direction, followed by consolidation and a sudden ‘flush’ to the other direction that ends close to the base price.

This phenomenon can also happen in non-crypto assets, and it has been given the name “Barts” because the asset’s price pattern looks like the head’s shape of the iconic Simpsons character, Bart Simpson.

It is useful to know how to recognise this pattern, as it can significantly affect short and mid-term trading positions. While it can happen to any cryptocurrency, it mostly revolves around Bitcoin for several reasons. One such cause is Bitcoin’s usual substantial volatility, as well as the fact that sharp changes in BTC value can affect the rest of the altcoins market as well. 

What causes a Bart?

Barts are caused by a lack of liquidity, along with large leveraged orders cascading the market in one direction, fuelled by the liquidations of traders being positioned on initial move down or up.

How to spot a Bart forming?

Barts are easy to spot on charts, below you can see a clear example on the 6th June. Here there is a sharp pump upwards, consolidation for a short period of time, and then a very sharp move downwards to start of the move up before the consolidation.

How to trade Barts

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 open a 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.

Alpha provides execution ladders that show a market moving in real time. You can utilise these ladders to optimise your execution when trading Bart patterns.

Learn more about our ladders here

Key Points / Bart Formation

• Bart pattern is named after the shape of the Bart Simpson haircut
• Bart occurs more in volatile markets
• Bart occurs more in low-cap markets
• Trade Bart patterns via our Trading Ladders

Conclusion

Bart formations play out time and time again in crypto markets, the key is to identify the sharp pump upwards/downwards followed by a short consolidation in a tight range. It is likely after this that if there isnt enough volume to sustain this new price, there is reason to suggest a sharp break will follow, targeting liquidations and cascading back to where value was previously established at the start of the formation.

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