Bitcoin - Classic H&S Patterns Emerging

By j0nesy1977.mj

Updated

One of the strongest TA reversal indicators is the Head and Shoulders (H&S) pattern. I am seeing quite a few emerging with BTC. As you can see from the chart an inverse H&S formed around the bottom of the down trend which would indicate a reversal up to $12600. However, a smaller H&S pattern seems to be emerging as I write, with the possible shoulder coinciding with the longer term down trend (red line). If this is confirmed it could take BTC down to around the $9000 level before recovering to the $12600 level indicated by the larger inverse H&S pattern. However it will have to contend with the long term down trend line at around $11250 which has presented a challenge. Now here's the kicker, IF and I mean IF, BTC breaks the resistance of $11250 and $12600 we could see a huge gain back to the $18000+ level, as indicated by the largest H&S pattern on my chart.

Please keep in mind that this is all speculation on my part, I'm just applying and extrapolating some TA techniques. In proper TA we should be looking for the confirmations before trading.

Trade active

Here we go down to 9K. Time to short...

Entry 10100-10200
SL: 10400
Target: 9010

Note

Wow that fall came with some volume. I don't see support coming. 9000 is still looking good to me.

Trade closed: stop reached

Stop reached, I overdid the low target. I believe I'm overdoing the targets on H&S patterns. The advice I have been given is that H&S patterns do not always reach their pontential. When I zoomed into the 2hr chart I saw a smaller H&S pattern which took us to the 9650 mark which we hit. I believe BTC is still in a general uptrend and I probably shouldn't have been going against the trend. Here is my new chart.

Note

I got the trend generally correct but the target was over ambitious. Based on this chart BTC will wind it's way back to 11,400 before getting back to around 12,500. Still consistent with this idea which predicted a sharp downturn of BTC before correcting and continuing the medium term uptrend. I've got to improve on my targets.

j0nesy1977.mj

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