Welcome everyone. Over the past couple of weeks in Bitcoin, we have seen an incredible amount of increasingly weak technicals. We saw a failure to breakout of an inverted head and shoulders pattern. We saw a powerful rejection of 50 EMA resistance, seen as the orange moving average. We saw the formation of lower highs on the chart. We saw the formation of a head and shoulders pattern (in red.) We saw the formation of a symmetrical triangle (in blue.) We saw the formation of a bear flag (in black.) We saw the triangle break and the bear flag break down, admittedly on weak volume. Then, just yesterday, we saw the completion of the head and shoulders pattern.
As you can see, the head and shoulders did not yet produce a breakdown. Price did trade slightly below the neckline, but has since rallied off of it, and BTC is now testing the bottom of the bear flag an d the bottom of the triangle.
With those developments in mind, it's important for us to understand this weakness. If we were going to see a rally back to the 50 EMA, and potentially above it, then we should have seen a hold of the bottom of the triangle. That was the rising support that BTC should have held, if we were going to breakout back to the upside. However, it wasn't held. We broke down below it, in this continuous development of technical weakness. So, unless we see something change, there is no reason to believe that we are going to rally here when we just failed to rally off of the perfect rising support.
Because of this continued weakness, I expect that price will continue to fall. Even if we did get above the triangle support, we have huge resistance just above that. The 50 EMA is there, and so is the midline of the downtrend channel, along with the top of the triangle. Therefore, the path of least resistance is currently to the downside. A fall will be even more likely, if we fail here, and confirm the bottom of the triangle and bear flag as resistance. I am expecting a decline to at least the weekly 200 MA (in pink,) which is currently around 3275. If we break down below that, we would see a test of the double bottom at 3128. If 3128 is lost, we will fall to the bottom of the channel, somewhere in the mid to low 2000's.
Adding to the bearish technical indications, you can see that on the MACD, there was continuous resistance at the zero line, before we had that powerful fall from 6000. We are currently seeing similar resistance at the zero line, just as we are failing at very important technical levels. This could be an indication of a powerful impending selloff.
The only thing that would change this technical picture, is if BTC can rally above the 50 EMA, and the top of the triangle. From there, we would be looking at a rally to the top of the channel. However, that appears to be very unlikely at the moment, given the sustained weakness on the chart.
Be smart. Be nimble. Good luck trading everyone!
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
you can't just draw and head and shoulders wherever you want. This chart is completely void of any theory to do with h&S. Im not saying its not going down - Im quite bearish
But these charts that people post just for the fuck of posting a chart, really need to stop.
VisionCodeX
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@frothmonster, You mean like that iH&S which somehow has turned into an H&S? I agree.
99.99% of authors on Trading View have no idea what is driving price action in Bitcoin.
So far, the right call has been to avoid or short Bitcoin. Like I've mentioned on 12/7/17-present. There's a reason why Bitcoin has much further to fall and its future is in jeopardy. But, just like all of 2018, most people here will continue to ignore this. 2019 will most likely be a repeat.
"Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell." - Sir John Templeton
@keifer, people are far too optimistic right now, we are still in the euphoria stage. A lot of air underneath. That price manipulation that got Bitcoin to 20K still has a lot more to unwind.
But these charts that people post just for the fuck of posting a chart, really need to stop.