Classic Double Top Formation On 4HR Chart
Double top formations are some of the easiest to learn and trade as beginners and experts. They typically consist of price rallies within a time span that reach a relatively similar price level, and have a definitive pullback between the two. Here, as we take a look at the 4HR candles, we can see that we have an easily recognizable double top formation. When trading a double top formation, the trader is waiting for a breakout below the lowest point in the pullback. Therefore, in order for this double top formation to be complete, we need a breakout below the pullback's price level
When the price does happen to dip below the breakout level, we can use simple math to estimate a price target for how low it can ( and should) go.
When creating price targets for double tops, the pullback lowest price level is subtracted from the average peak of the price rallies. To keep things simple, I have taken the numbers below when creating price targets.
Average Peak of Price Rallies : $9100
Pullback Low Price Level : $8400
Breakout Level : $8400
$9100 - $8400 = $700
Price Target : $8400 - $700 = $7700
For now, I will set Price Targets in the range of $7750 - $7550. The gray boxes indicate both the price range of the top of the double top formations, and the price target for the pullback beyond the breakout level.
Supplemental Information :
It is helpful when trading to take a look at several signals, ensuring that the trader does not get blindsided by obvious increases in volume or a hidden change of direction not always easily recognizable on the chart itself. I have listed the Stochastic RSI and the MACD below to aid in helping you make a well rounded decision. On the Stochastic RSI, it is clear that we have a lot of room for downward momentum ahead of us. On the MACD, we also have some downward pressure that should be helping us along in the direction of completing a textbook double top formation. It is also good to note that we have moderate supports along the route to $7700, but nothing that should staunch BTC in its march down to complete this double top. However, I don't feel that BTCUSD is capable of much more downward movement beyond $7600, as there is heavy support around that level.
If you feel like this was helpful and would like to donate so that I can continue to put out more ideas, feel free to donate to the address below!
BTC:
Double top formations are some of the easiest to learn and trade as beginners and experts. They typically consist of price rallies within a time span that reach a relatively similar price level, and have a definitive pullback between the two. Here, as we take a look at the 4HR candles, we can see that we have an easily recognizable double top formation. When trading a double top formation, the trader is waiting for a breakout below the lowest point in the pullback. Therefore, in order for this double top formation to be complete, we need a breakout below the pullback's price level
When the price does happen to dip below the breakout level, we can use simple math to estimate a price target for how low it can ( and should) go.
When creating price targets for double tops, the pullback lowest price level is subtracted from the average peak of the price rallies. To keep things simple, I have taken the numbers below when creating price targets.
Average Peak of Price Rallies : $9100
Pullback Low Price Level : $8400
Breakout Level : $8400
$9100 - $8400 = $700
Price Target : $8400 - $700 = $7700
For now, I will set Price Targets in the range of $7750 - $7550. The gray boxes indicate both the price range of the top of the double top formations, and the price target for the pullback beyond the breakout level.
Supplemental Information :
It is helpful when trading to take a look at several signals, ensuring that the trader does not get blindsided by obvious increases in volume or a hidden change of direction not always easily recognizable on the chart itself. I have listed the Stochastic RSI and the MACD below to aid in helping you make a well rounded decision. On the Stochastic RSI, it is clear that we have a lot of room for downward momentum ahead of us. On the MACD, we also have some downward pressure that should be helping us along in the direction of completing a textbook double top formation. It is also good to note that we have moderate supports along the route to $7700, but nothing that should staunch BTC in its march down to complete this double top. However, I don't feel that BTCUSD is capable of much more downward movement beyond $7600, as there is heavy support around that level.
If you feel like this was helpful and would like to donate so that I can continue to put out more ideas, feel free to donate to the address below!
BTC:
Trade active:
Bitcoin has now successfully closed a few hourly candles below the breakout region. I am actively trading now, and currently waiting for a target reached of $7700.
Also to note, on Binance is the inverse correlation between DGD and BTC. As BTC takes a dive, DGD is rising rapidly. If you don’t have the opportunity to short BTC, DGD could also play as a good option.
Also to note, on Binance is the inverse correlation between DGD and BTC. As BTC takes a dive, DGD is rising rapidly. If you don’t have the opportunity to short BTC, DGD could also play as a good option.
Although BTC is clearly flirting with the breakout line, a closed candle is often necessary to ensure the chart formation will be fulfilled.
I will wait for an hourly candle close below the $8400 to $8300 range before I enter this trade.