Breaking the Bear Trend - Three Bullish Formations in Bitcoin
Bear with me here because there is a ton of information on this chart (no pun intended). Looking at the 4-hour chart, there are a few bullish formations that can be identified:
1. Ascending wedge (light red)
TARGET: ~8100 (approx 1200 EMA)
STATUS: Broken out
2. Bull flag (white)
TARGET: ~7000
STATUS: Broken out
3. Inverse H&S (green)
TARGET: ~7780 (exactly 7780 resistance)
STATUS: In formation
This gives us 3 potential targets, all different but luckily all in the same direction. The bull flag completes the inverse H&S and the inverse H&S completes the wedge. There are 2 underlying paths this could lead us on:
1. Reach top of bearish trend line and collapse again
2. Reach top of bearish trend line, find miraculous momentum, and break it.
Number 2 in this scenario would require other formations in the future to form. As of right now, all we can (hopefully) assume is that we will reach the top of the bearish trend line. I believe that the H&S, if formed, will lead this process. The momentum it would give is necessary to break the rising orange resistance line and others in its way. In addition to this, its target would align nearly exactly to the top of the bearish trend line given we make some rapid movements. Also, it should be noted that if Number 1 plays out, it would also represent an underlying Elliot Wave and result in a retracement.
This, however, is assuming that each one of these formations play out. I hope this big picture analysis helps you figure out your own strategy.
1. Ascending wedge (light red)
TARGET: ~8100 (approx 1200 EMA)
STATUS: Broken out
2. Bull flag (white)
TARGET: ~7000
STATUS: Broken out
3. Inverse H&S (green)
TARGET: ~7780 (exactly 7780 resistance)
STATUS: In formation
This gives us 3 potential targets, all different but luckily all in the same direction. The bull flag completes the inverse H&S and the inverse H&S completes the wedge. There are 2 underlying paths this could lead us on:
1. Reach top of bearish trend line and collapse again
2. Reach top of bearish trend line, find miraculous momentum, and break it.
Number 2 in this scenario would require other formations in the future to form. As of right now, all we can (hopefully) assume is that we will reach the top of the bearish trend line. I believe that the H&S, if formed, will lead this process. The momentum it would give is necessary to break the rising orange resistance line and others in its way. In addition to this, its target would align nearly exactly to the top of the bearish trend line given we make some rapid movements. Also, it should be noted that if Number 1 plays out, it would also represent an underlying Elliot Wave and result in a retracement.
This, however, is assuming that each one of these formations play out. I hope this big picture analysis helps you figure out your own strategy.
Trade closed: target reached