I have followed done my own analysis on BTCUSD for many years, but have stayed away from posting them publicly due to the sheer numbers of TA's publishing BTCUSD. Most are very, very inexperienced and with errors in their analysis, and a few are very strong. Plenty of coverage in other words. Why add one more...
In this case, I will make an exception. Bitcoin appears to be attempting to carve out a bottom of significance. Will it be THE bottom? Time will reveal, but the pattern I am seeing absolutely begs to be followed.
An inverse head and shoulders pattern may be forming. I say "may" because the pattern is not complete.
2 steps remain.
Step 1: The inverse H&S pattern needs to rally up from near current levels to the neckline (between 4100 - 4200) to form a complete right shoulder.
Step 2: Price needs to break out above the neckline, ideally with some volume behind it to be confirmed.
The interesting part is that the measured target should the H&S be confirmed is right in an area of some resistance and a downward sloping trendline near 5200.
It is not a perfect pattern. The neckline is downward sloping. Since H&S is commonly a reversal pattern, the fact that the neckline is not straight or upward facing infers an overall weakness in the bulls. If the pattern is confirmed, this may lead to it not hitting the ideal target before correcting.
I have seen many critical comments of perfectly valid analysis from experienced traders that point out imperfections in the pattern. Look, I have been trading for many years, logged thousands of round trip trades, and way too many hours in front of charts.
I am here to tell you that perfect patterns are pretty rare. A pattern being imperfect does not make it invalid.
Most pattern based TA methods have rules and guidelines. Rules, if broken invalidate the TA pattern being followed. Guidelines simply provide guidance. They tell a trader what is likely. Too many guidelines off mean a pattern is weak. I have seen many, many weak patterns play out exactly as the pattern suggested it would. The main problem with these patterns is obvious... they are hard to have any confidence in, especially for inexperienced traders.
This is why (in part) good money management is sooo important. Weak patterns can complete while you are on the sidelines. Strong patterns can fail while you are caught in the middle. Live to trade another day. The price is the price. It is what pays. Needing to be "right" all the time is a fools errand. Most professional traders have a win rate below 50% and yet still make a living. Why?
1. They don't risk too much on any trade.
2. They cut losses short (by finding good setups using their TA method of choice where there are clearly defined levels where they are "wrong" and exit).
3. They let profits ride (let the winners play out to the full extent of the pattern).
4. They protect profits (exiting 50% or more of trades at defined levels).
Good luck!
In this case, I will make an exception. Bitcoin appears to be attempting to carve out a bottom of significance. Will it be THE bottom? Time will reveal, but the pattern I am seeing absolutely begs to be followed.
An inverse head and shoulders pattern may be forming. I say "may" because the pattern is not complete.
2 steps remain.
Step 1: The inverse H&S pattern needs to rally up from near current levels to the neckline (between 4100 - 4200) to form a complete right shoulder.
Step 2: Price needs to break out above the neckline, ideally with some volume behind it to be confirmed.
The interesting part is that the measured target should the H&S be confirmed is right in an area of some resistance and a downward sloping trendline near 5200.
It is not a perfect pattern. The neckline is downward sloping. Since H&S is commonly a reversal pattern, the fact that the neckline is not straight or upward facing infers an overall weakness in the bulls. If the pattern is confirmed, this may lead to it not hitting the ideal target before correcting.
I have seen many critical comments of perfectly valid analysis from experienced traders that point out imperfections in the pattern. Look, I have been trading for many years, logged thousands of round trip trades, and way too many hours in front of charts.
I am here to tell you that perfect patterns are pretty rare. A pattern being imperfect does not make it invalid.
Most pattern based TA methods have rules and guidelines. Rules, if broken invalidate the TA pattern being followed. Guidelines simply provide guidance. They tell a trader what is likely. Too many guidelines off mean a pattern is weak. I have seen many, many weak patterns play out exactly as the pattern suggested it would. The main problem with these patterns is obvious... they are hard to have any confidence in, especially for inexperienced traders.
This is why (in part) good money management is sooo important. Weak patterns can complete while you are on the sidelines. Strong patterns can fail while you are caught in the middle. Live to trade another day. The price is the price. It is what pays. Needing to be "right" all the time is a fools errand. Most professional traders have a win rate below 50% and yet still make a living. Why?
1. They don't risk too much on any trade.
2. They cut losses short (by finding good setups using their TA method of choice where there are clearly defined levels where they are "wrong" and exit).
3. They let profits ride (let the winners play out to the full extent of the pattern).
4. They protect profits (exiting 50% or more of trades at defined levels).
Good luck!