People have been wish-ful-thinkingly seeing a very early inverse H&S on Bitcoin for some time now, but that very inverse head & shoulders really seems to be forming that last shoulder. Given the difference between the left shoulder and the head being around 4K, and the neckline around $11,5K – this would give us a target of $15,5K for this inverse H&S.
Note that if you want to trade this inverse H&S and want to do it by the book, you wait until break-out confirmation above neckline 1. Alternative entry points are when price bounces back after that initial break-out, but those are more complex and require more patience. Volume might also be massive when such a break-out occurs, so who knows BTC doesn’t even go for a retesting of that neckline (but I think it will).
So that’s our inverse head & shoulder number 1 – with target at around $15,5K which also coincides with the 23,6% Fibonacci retracement level.
The potential party isn’t over yet however – if you look at the chart, you will see a second left shoulder, the head, and if price would be bouncing around somewhat between neckline 1 and target 1, we have a right shoulder as well. In that case, we’re not speaking about 55% profit potential anymore, but $23-24K for Bitcoin or more than double the price now. We would have to wait to beyond May however for that to occur. But who knows, maybe mid-March we’re already at 15K, and you’d probably be glad already ;)
So, what do you think?! ;-)
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And there we go again ---> Heikin Ashi reversal candle on the chart, followed by a nice big fat green upward candle
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& if we zoom in on the 4-hourly, we see Bitcoin going for that resistance again. MACD in favour of the bulls
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Guys, just want to point out three things:
In my other post on "recognising trend reversals in Bitcoin", following this link:
- I explained how you can spot trend reversals in Bitcoin.
I also want to get your attention on that one again, as:
1) you could have called the bottom again after the analysis in that post (i.e. when I called a top in "2", simply by looking at the forming of the next doji (in "3").
2) You can see how the dojis told us there was a trend reversal pending in "1" and in "2"
3) we are only seeing nice green candles for the moment, so no doji yet ;-) that is good news, but stay attentive!
(note again that we are talking Heikin Ashi candle sticks, not regular candle sticks)!
That the altcoins will bleed more? :)
I hope you are right, glad i start following
A_Cryptastic_Mind
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@Dieter1983, nah I don't want the altcoins to bleed! :)
Crypt0nyx
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Your LS2 How would that be considered a left shoulder, I thought a head and shoulders is a reversal pattern so the head and shoulders couldn't form until a trend is established? Not critiquing, just trying to learn.
A_Cryptastic_Mind
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@Crypt0nyx, There is a slight but crucial difference in stating that "a H&S" or similar is forming and trading it. If we want to trade, we can be impatient and start a position before there even is a confirmation of a H&S break-out or even a H&S just by itself. If we want to trade on it the correct way, we wait for a break-out on the neck-line (after the full H&S figure has formed). That break-out can be considered the go signal for buying into your trade (you can put automatic orders there and stop losses in case the breakthrough attempt doesn't go as expected). Anyway, if we look at the LS2 that I drew, this is of course not much more than wishful thinking for the moment, but if we look at the target of H&S1, we see that it will end up in the area where the RS2 of potential H&S2 could form. So: if H&S1 break-out becomes a reality, we will end up in the zone of RS2, and we will likely see some testing of resistance there, some swingy price movement consolidating a moment in that area (& in that way, forming a visible RS2), and if price were to move up again from that point, we would have a break-out of a second H&S. Important remark here is that this H&S2 is one of many plausible scenarios, and I just wanted to highlight it. What we should be looking for at THIS time, is just how the first H&S evolves. Unless a clear break-out of the neckline, nothing is confirmed!
Hope this helps! :)
Crypt0nyx
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@A_Cryptastic_Mind, I appreciate the explanation where I'm confused tho is, from my understanding, a H&S or Inverse H&S is a reversal pattern so even if your hypothetical is correct and a RS2 forms, how would an inverse H&S be an indicator for a buy signal at the top of an uptrend? I thought an inverse head and shoulders is a reversal indicator in a down trend and a regular head and shoulders is a reversal signal in an uptrend? So I guess what I'm asking is, if a downtrend reversal pattern happens at the top of an uptrend, can you still use it for valid price targets?
A_Cryptastic_Mind
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@Crypt0nyx, aah! now i get what you were asking. No, you are correct, a H&S is a reversal pattern and should be applied like you say it: to indicate a trend reversal as buy signal as end of a downward trend in this case. Even so, this does not necessarily preclude the H&S2 from being a (very large for that matter) second H&S (although this is mostly wishful thinking, and perhaps too close to the previous top ;) )