BITCOIN - SHORT TERM OPPORTUNITY

A head & shoulders continuation pattern has formed on the hourly chart, offering a possible opportunity to buy if BTC breaks through the blue dotted neckline, or to go short if the price is rejected by the neckline.

This is a continuation pattern because it is contained with the larger bull flag pattern (shown by the two long sloping horizontal lines). It is a 'bull' flag because such a pattern usually resolves itself to the upside and would continue the bull run that started earlier this year.

The dilemma for traders, IF the price breaks upwards through the neckline, is whether to hold BTCUSD in anticipation of the big breakout upwards through the top of the bull flag. OR whether they should sell at the top neckline in anticipation of a swing back downwards as part of the bull flag.

It's always tempting in these situations to sell when the price reaches the top blue dotted line, and then wait to see if the price breaks out above the line, in which case you may be able to quickly buy in again before the price rises too much. Every option involves risk.

Comment:

I bought the breakout, as planned. It's a bit of a weak breakout so far but I'm well into profit at the moment so I'll see how it goes...

Comment:

The breakout was looking too weak for comfort, so I sold close to 11,000, took my profit and am now watching the retest of the breakout line to see whether the price can stay on the right side of the line. If it can, I may try a long re-entry.

Comment:

Retest failed. End of pattern. Well I can't complain - I made money from the breakout before it reversed itself. Now we just have to wait for the next pattern to emerge.