Head and Shoulders ?- BTC
Updated
Hello fellow Cryptonians, looking at the 4 hour BTC chart, an upward channel (in blue) has formed over the last couple days. Currently we are testing the bottom of the channel at $4000, price has held previously at the $3900 and $3600 levels. If we continue to follow this uptrend we will bounce off the bottom of the channel and retest our last high at $4280 and then go on to test the top of the channel.
On the other hand a continuation of the uptrend seems to be unlikely, due to the fact that we have created a head and shoulders pattern in the channel, which usually indicates a trend reversal. A breakout of the channel will likely cause BTC to drop down and test the $3600 level.
When looking at the volume it is clear that it is decreasing and since we are at a significant spot we should see spike in volume and a breakout in either direction.
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On the other hand a continuation of the uptrend seems to be unlikely, due to the fact that we have created a head and shoulders pattern in the channel, which usually indicates a trend reversal. A breakout of the channel will likely cause BTC to drop down and test the $3600 level.
When looking at the volume it is clear that it is decreasing and since we are at a significant spot we should see spike in volume and a breakout in either direction.
Thanks for reading!
If You like this TA please hit the LIKE button!
Please leave a comment with Your thoughts and feedback!
*This information is not trading advice and is to be used for educational purposes only!
Note
BTC has turned bearish after the head and shoulders it has created over the last couple days. We are currently seeing a reaction rally at $3800 level; however there is weak support until $3000 level which is both a psychological and technically strong support.
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We have had a small rally from the $3800 - $4000 level and are currently retesting the $3800. However I do not think that this level will hold; do to the fact we have bearish sentiment because of the rejection at $4000 and weak support at $3800. BTC will likely breakout downward and test the yearly low around $3500.
In the case that the Bulls take over we should see a retest of $4000.
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We have found support at the yearly low and are currently retesting the previous support of $3800. However due to the lack of volume in the breakout and continuation of the downward channel, we will likely test the bottom of the channel around $3000.
In the case the Bulls, we should first see test and then a breakout out the top of the channel.
Note
I like to first start off by saying that the bottom trend line for channel I mentioned in my previous update was not very accurate. When redrawing the trend line, it is easy to see that we have formed a falling wedge pattern. In classical TA this is a bullish reversal pattern. If we have a breakout above the top of the wedge we can confirm the bullish trend.If we have a breakout below the bottom of the wedge we will continue the bearish trend and test the next support area.
Currently BTC has been rejected again at the previous support of $3800 and is testing the bottom of the wedge around $3500 which is also the area for the yearly low, making it a strong support area.However if we fail to bounce off this support with large volume and purge the bottom of the wedge and the yearly low; we can expect a drop of %14 to the next support level around $3000.
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Previous chart got cut off, here is a better view.
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Target is still moving slowly moving down to the target of $3000 however we are now seeing a reaction rally.
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