As you can see, I have reintroduced the inverted possibility on the chart. Now, I'm not saying that an inverted is definitely developing. Rather, I have included it on the chart as a possibility that we should not ignore. It is POSSIBLE that price is in the process of forming an inverted pattern (in green,) below the 50 . It isn't unusual for markets to form patterns below important resistance levels, when the market is at an important inflection point. When markets do this, it's like investors are gearing up for a powerful move through the resistance. You can think of it as a spring. Occasionally, the market will attempt to build explosive power, like a compressed spring, with formations below key resistance. The market is far more likely to blast through the 50 , when launched from an inverted breakout, than just a random unenergized test of the 50.
So, that's one scenario. On the other hand, BTC technically appears to have just printed a lower high under the 50 . Using history as an indicator, over the past several months, a failure around the 50 has usually lead to lower lows in the market. So, technically, that is the higher probability outcome — based on recent historical evidence. We also cannot forget that BTC never touched 3000. It got very close, but it never actually tested 3K. Here on the Coinbase chart, BTC got down to a low of 3128.89. The support from 6/11/17 is right at 2998.99.That's critical support that should have been tested, but it never was. So, if BTC breaks below the 3000 range, it could generate some major selling.
Touching on the possible inverted pattern, we can see where the neckline would be (blue .) The problem that I have with it, is that it has a negative slope. Generally, inverted patterns with negative slopes tend to be weaker than those with flat to positive slopes. So, it isn't the strongest looking structure, for a potential inverted pattern. However, the 50 (in orange) will soon intersect with the neckline of the (potential) IH&S pattern. The intersection or convergence of those two resistance levels could produce a powerful breakout, if price is able to surpass them both simultaneously. So, we can't write off a BTC recovery toward 6000 just yet. If price can curl back up, and complete the right shoulder, then break out above the 50 and hold it as support, I think BTC will charge higher toward the Heavy Overhead around 6000. I've talked about that area on multiple occasions. You can see that price broke down below it on 11/14/18, formed a , and never looked back. So, technically, BTC broke down below major support at the 5777 level, and never tested it to confirm it as resistance. So, I can see a technical case for why we could rally back up toward the 6K level.
On the , momentum is starting to roll over, indicating that more downside is likely for the next few days. The is also showing that buy-side strength has hit resistance. These indications align with the possibility that price will fall for a few days, and potentially recover, to form a right shoulder. On the other hand, price could fall and attempt to break down below 3000. We simply don't know until the market can show us more data. For now, let's watch carefully, to see if BTC can form a base for the right shoulder. If that happens, then we will have an increased probability that this IS actually an inverted pattern. Until then, it's best to be short-term neutral on the market.
Happy Holidays Everyone!
I'm the Santa of the charts, and you can call me Saint Poop. HO HO HO!!! Meeerry Christmaaaas!
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***