Bitcoin to drop below channel support

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
Bitcoin is potentially forming a head and shoulders , in which case we should meet heavy resistance at the larger trend line resistance then fall below support of the ascending channel to print the neckline. We currently have hidden bearish divergence on the 1H chart so expecting a drop soon. This should coincide with a 138.2 fib extension from the $4488 swing high to around $3745. Price should then retest the ascending channel as resistance with a 61.8 fib retracement to around $4282 to print the right shoulder.

We have various levels of support if the pattern is validated and breaks to the downside although if we have a full 161.8 fib extension then we might even reach $3300 which would be a 83.4% drop from the $19891 ATH in December and would reach our 200 week moving average. This is also our next major support after the $3500 area and we should find the larger trend line support before rebounding. We had the worst monthly close for November since January 2015 and I think we still need to reach the lower $3k area and that 200MA weekly before this bottom is truly set in. Full respect for my stop loss on this trade!

Good luck and happy trading!

Relevant previous post:

Comment: Watch the $3900 support, we have bullish divergence on the 4H chart so we might not retrace all the way to $3750 which is the second support zone. If so, our neckline will be a bit steeper.
Trade closed: target reached: Target hit with precision :)


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