What? U Think I'd Leave U Hangin on Christmas? BITCOIN! (BTC) =D
Ho Ho Ho!!! Hi friends! Welcome to this holiday analysis of Bitcoin! Let's get right to it! Looking at the daily chart, we can see that BTC rallied almost to the 50 EMA (in orange.) It got soooo close, but turned back to the downside today without actually testing it. Seeing that the market got so close to the 50, but failed to physically test it, tells me one of two things. Number one: the buy-side strength is still extremely weak, and price will likely return to the downside to form a lower low. Or, number two: the market is coiling up below the 50 EMA, forming a potentially bullish pattern, to blast through the 50 EMA on a breakout of that pattern. Honestly, there is no way to know right now. So, while the market chops sideways here, we have to let it show us where it wants to go.
As you can see, I have reintroduced the inverted head and shoulders possibility on the chart. Now, I'm not saying that an inverted head and shoulders 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 head and shoulders pattern (in green,) below the 50 EMA. It isn't unusual for markets to form bullish 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 bullish formations below key resistance. The market is far more likely to blast through the 50 EMA, when launched from an inverted head and shoulders 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 EMA. 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 pivot 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 head and shoulders pattern, we can see where the neckline would be (blue trendline.) The problem that I have with it, is that it has a negative slope. Generally, inverted head and shoulders 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 head and shoulders pattern. However, the 50 EMA (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 EMA and hold it as support, I think BTC will charge higher toward the Heavy Overhead Resistance Zone 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 bear flag, 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 MACD, momentum is starting to roll over, indicating that more downside is likely for the next few days. The RSI 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 head and shoulders 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.***
-JD-
As you can see, I have reintroduced the inverted head and shoulders possibility on the chart. Now, I'm not saying that an inverted head and shoulders 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 head and shoulders pattern (in green,) below the 50 EMA. It isn't unusual for markets to form bullish 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 bullish formations below key resistance. The market is far more likely to blast through the 50 EMA, when launched from an inverted head and shoulders 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 EMA. 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 pivot 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 head and shoulders pattern, we can see where the neckline would be (blue trendline.) The problem that I have with it, is that it has a negative slope. Generally, inverted head and shoulders 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 head and shoulders pattern. However, the 50 EMA (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 EMA and hold it as support, I think BTC will charge higher toward the Heavy Overhead Resistance Zone 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 bear flag, 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 MACD, momentum is starting to roll over, indicating that more downside is likely for the next few days. The RSI 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 head and shoulders 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.***
-JD-