It is important to look for significant support that might impede the falling momentum. Check if a critical support exists between the head and shoulders pattern and the target before trading. (In this trade we have two, roughly 7941 and 7895.)
Trade active
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Test of the neckline appears to have failed, this is a common pattern in Head and Shoulders. Still monitoring this closely as ₿itcoin is in a mega bull cycle and this is a short term play.
Order cancelled
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Breakout occurred on the neckline, trade idea cancels out for this position.
A major trend reversal requires a strong head and shoulders pattern. To reverse a strong bull trend, you should look for a head and shoulders pattern that forms over a longer period. In some cases, waiting a few weeks for a pattern to complete is common. But that typically applies to traditional investment vehicles, in BTC they can happen much quicker,
A couple guidelines for trading them are:
1. Give more truth to a head and shoulders pattern with a upsloping neckline.
2. When the right shoulder is lower than the left shoulder, consider it a sign of higher profit potential.
3. Some traders get stuck on perfectly formed H & S. They think of symmetrical patterns as superior, crypto trading is far from symmetrical, symmetrical looking patterns typically perform worse.
4. The neckline break should occur with a volume spike.You can see the volume surge with the help of a volume indicator like the OBV.
5. Always, always let a H & S confirm before entering, it is a danger to open the position without it forming and breaking the neckline considering the amount of buy volume that is entering BTC.
6. It’s important to look for significant support that might impede the falling momentum. Check if a strong support exists between the head and shoulders pattern and the target. (In this trade we have two, 7941 and 7895.)
Rules I use for trading H & S efficiently
A. Enter when the price breaks below the neckline.
B. Place your stop-loss above the right shoulder.
C. Measure the distance between the head and the neckline.
D. Project the distance measured in C down from the neckline, place your target limit order there.
You’ll learn that patience is the key for trading head and shoulders patterns.
Intuition tells me Short. I am newbie. Are those Fibs that you get the 7941 and 7895 support levels from?
Thanks, I really appreciate it! JW
Nick_Core
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@jwboing, They are, but also past levels I found key.
CryptoHungryRurr
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H&S are you for real? its to ugly and 5 min chart...
Nick_Core
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@CryptoHungryRurr, Shall I take you serious? Yes the H & S formed there, volume profile matched and so did the formation.
3. Some traders get stuck on perfectly formed H & S. They think of symmetrical patterns as superior, crypto trading is far from symmetrical, symmetrical looking patterns typically perform worse.
And what does the 5 minute have to do with it, H & S can be found on all time frames, it cancels out when it crosses the neckline, which it tested and is normal to do so, bulls are strong currently so if the H & S cancels then that is what the stop loss is for at a very minimal loss. Day trading goes like this which I am assuming you don't do. And yes I realize we created a bull flag before this, but this is within it.
A couple guidelines for trading them are:
1. Give more truth to a head and shoulders pattern with a upsloping neckline.
2. When the right shoulder is lower than the left shoulder, consider it a sign of higher profit potential.
3. Some traders get stuck on perfectly formed H & S. They think of symmetrical patterns as superior, crypto trading is far from symmetrical, symmetrical looking patterns typically perform worse.
4. The neckline break should occur with a volume spike.You can see the volume surge with the help of a volume indicator like the OBV.
5. Always, always let a H & S confirm before entering, it is a danger to open the position without it forming and breaking the neckline considering the amount of buy volume that is entering BTC.
6. It’s important to look for significant support that might impede the falling momentum. Check if a strong support exists between the head and shoulders pattern and the target. (In this trade we have two, 7941 and 7895.)
Rules I use for trading H & S efficiently
A. Enter when the price breaks below the neckline.
B. Place your stop-loss above the right shoulder.
C. Measure the distance between the head and the neckline.
D. Project the distance measured in C down from the neckline, place your target limit order there.
You’ll learn that patience is the key for trading head and shoulders patterns.