The Battle for the Future of Bitcoin (2018) Who will win? Bulls?
Alright, my last analysis called it in too quickly, because right now the bulls are putting up a good fight, so I decided to create a new idea where I talk a lot more of what has happened/the possible inverted head and shoulder.
So, this shows all of the classic signs of being an inverse head and shoulders, generally, bottom patterns take longer to occur and this possible inverted head and shoulder has taken roughly 1 month already and it still is not complete. In one of my books, there are somethings that clearly define an inverse head and shoulder pattern.
1.) A prior trend: For this there was a prior trend and the violet trendline was broken.
2.) The left shoulder occurred with heavier volume (point A), while the rally to point c occurred on lighter volume. There was also a bullish divergence than occurred that also helped identify this signal.
3.) A incline rally that moves to prices close to point B (Point d). Now there is something really interesting that is occurring here and I will have the give more leverage to the bulls on this one, and that is the slope of the neckline is horizontal, when an inverse head and shoulder should generally be sloping downwards (it would be opposite for a topping head and shoulder pattern). But a horizontal/upward sloping inverse head and shoulder signals that the current downtrend is weak and implies strong bullish undertones. I believe this is necessary if we are expected to test the trendline of the descending triangle in purple.
4.) Currently, there is a rally, point E and if this rally fails to reach the head of this pattern then it is likely to say that a valid inverse head and shoulder is forming. One thing that is important to take note of is the fact that this is more of a symmetrical pattern (this was the reason why I threw in the towel in my last analysis--the head was not symmetrical) however the bulls are proving me wrong, and I like being proved contrary on things like this. I would say that a move close to 6100 would still uphold the right shoulder, however, any thing beyond that might cause the bears to rally and the bulls to surrender prematurely, because technically they could be fighting all the way to 5900 for the shoulder to still be valid. In terms of the bottom of the right shoulder there is a lot of support around 6250 and it feels like it is currently a psychological stronghold for the bullish because they are not letting the bears touch it yet. A right shoulder that does not reach the lows of the left shoulder (6118 to be exact) would signify more bullish momentum and bullish strength. (Possibly enough to break through the descending triangle).
Since the left shoulder took 2 weeks to develop, I would also assume that the right shoulder would take a similar amount of time. (The head also took 2 weeks to form).
5.) On a bottoming pattern, it needs to break through the neckline with high volume, and I mean crazy high volume, otherwise I would say that the inverse head and shoulder pattern would have failed and been invalidated.
6.) A return move often occurs, but fuck that this is bitcoin hopefully it smashes through resistance lines like the hulk.
In the end, I will give the bulls the slight upper hand due to the fact that the neckline is horizontal, and if the right shoulder does not hit 6100 I would add another point to the bulls giving them more of and upper hand, and a breakout above the neckline on high volume would complete the bottoming pattern.
Currently I am waiting for a bullish divergence to occur on the 4hr for me to say that the right shoulder has bottomed, however, there has been a 1 hour bullish divergence that did occur, but I am suspecting a move to at least 6250.
My previous analysis:
So, this shows all of the classic signs of being an inverse head and shoulders, generally, bottom patterns take longer to occur and this possible inverted head and shoulder has taken roughly 1 month already and it still is not complete. In one of my books, there are somethings that clearly define an inverse head and shoulder pattern.
1.) A prior trend: For this there was a prior trend and the violet trendline was broken.
2.) The left shoulder occurred with heavier volume (point A), while the rally to point c occurred on lighter volume. There was also a bullish divergence than occurred that also helped identify this signal.
3.) A incline rally that moves to prices close to point B (Point d). Now there is something really interesting that is occurring here and I will have the give more leverage to the bulls on this one, and that is the slope of the neckline is horizontal, when an inverse head and shoulder should generally be sloping downwards (it would be opposite for a topping head and shoulder pattern). But a horizontal/upward sloping inverse head and shoulder signals that the current downtrend is weak and implies strong bullish undertones. I believe this is necessary if we are expected to test the trendline of the descending triangle in purple.
4.) Currently, there is a rally, point E and if this rally fails to reach the head of this pattern then it is likely to say that a valid inverse head and shoulder is forming. One thing that is important to take note of is the fact that this is more of a symmetrical pattern (this was the reason why I threw in the towel in my last analysis--the head was not symmetrical) however the bulls are proving me wrong, and I like being proved contrary on things like this. I would say that a move close to 6100 would still uphold the right shoulder, however, any thing beyond that might cause the bears to rally and the bulls to surrender prematurely, because technically they could be fighting all the way to 5900 for the shoulder to still be valid. In terms of the bottom of the right shoulder there is a lot of support around 6250 and it feels like it is currently a psychological stronghold for the bullish because they are not letting the bears touch it yet. A right shoulder that does not reach the lows of the left shoulder (6118 to be exact) would signify more bullish momentum and bullish strength. (Possibly enough to break through the descending triangle).
Since the left shoulder took 2 weeks to develop, I would also assume that the right shoulder would take a similar amount of time. (The head also took 2 weeks to form).
5.) On a bottoming pattern, it needs to break through the neckline with high volume, and I mean crazy high volume, otherwise I would say that the inverse head and shoulder pattern would have failed and been invalidated.
6.) A return move often occurs, but fuck that this is bitcoin hopefully it smashes through resistance lines like the hulk.
In the end, I will give the bulls the slight upper hand due to the fact that the neckline is horizontal, and if the right shoulder does not hit 6100 I would add another point to the bulls giving them more of and upper hand, and a breakout above the neckline on high volume would complete the bottoming pattern.
Currently I am waiting for a bullish divergence to occur on the 4hr for me to say that the right shoulder has bottomed, however, there has been a 1 hour bullish divergence that did occur, but I am suspecting a move to at least 6250.
My previous analysis:
Comment:
The bulls did a great job defending the bottom of the right shoulder, there is currently a symmetric triangle forming, and this I would say it more likely to breakout upwards because there is a strong trendlines that the bulls have created. However, if it does not break to the upside, expect further moves to the downside.
IF the price of bitcoin does not hold above 6000 every support in the 5k region other than 5850 would not be strong enough and I would expect a drop to 5000/4850.
IF the bulls can push the right shoulder back up, then we are still in the realm of an inverse head and shoulder, but it's ability to break through the neckline would be much more questionable.