Before we go any further, I want to address something that occasionally comes up in my comment sections, because it applies to the current market condition. For some reason, the MPC trolls out there love to harp on how I called for an inverted pattern in May of 2018, which actually failed to break out. They will tell you how bad I suck as an analyst, and that I told everyone to buy at the top of a move, etc. etc. Clearly, the people who say those things, didn't actually read those analyses, because I stated in every single one that we were in a "resistance zone" that "could cause a reversal," and that pattern breakouts are NOT guaranteed. If you would like to see for yourself, that analysis is linked below.
So, yeah, that concept applies very much to today. No pattern is guaranteed to break out. Does that mean that this isn't an inverted pattern? No. The formation in May was an inverted pattern too. It just didn't break out, much like I had warned in my analyses. Pattern failures are a normal part of . It isn't my job to "predict," if a pattern is going to breakout or not. I have NO idea. I never claimed to have an idea of that at all. Nobody does, and if they say that they do, they're lying to you. Like I said, I don't make "predictions." I project where the market is likely to go, based on formations, breakouts, and other technicals in the market. That's what works. When it comes to formation trading, it's usually recommended to wait for confirmed breakouts before trading. Linking that concept to the current market condition, you all know that I went long at the exact bottom in BTC and LTC, after I gave you all the reversal analysis, and told you that I had gone long. Now that BTC is approaching resistance in the right shoulder, I will not add to my long until I see a confirmed breakout. That's how I trade. If the market breaks down back below the neckline, or fails for example, I would then short to hedge my long, which I am not liquidating at this point.
So, yes, we could definitely see a failure here. I think that it's unlikely, but it is possible because the neckline is resistance, and the 50 (in orange) is resistance, and we're right under both of them. We absolutely positively could fail here. In fact, during the analysis from May that I was just referring to, LTC had broken out above the neckline of it's inverted pattern, before BTC even tested it, exactly like today. However, LTC rolled back over, producing a failed breakout, and BTC just failed at the neckline. Nothing is guaranteed, until we see a nice breakout above the 50 and the neckline of the inverted pattern. If, if, IF, that does happen, we would likely see a rally to the low 5000s, as BTC would reach resistance at the falling blue . If we produce a big failure here, I expect the market to fall back down toward 3000.
has been contracting on the chart, which is perfectly in line with the normal development of a pattern. contracts as the pattern progresses, and then spikes on a successful breakout or a powerful failure. That's what we're looking for, one way or the other, to know the forward direction of the market.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
May's pattern was a rising inverted H&S. The current pattern is a descending inverted H&S. This is a significant change, since it's adds a bearish significance to the chart.