While the whole world is ultra bullish on crypto, we need to keep in mind that this is a highly volatile market, and there is a TON of risk. I'm not trying to spread FUD, or say that this is going to happen — I just want to use this as an exercise, for us all to assess the very real downside risk.
Looking at the daily BTC chart, we can see that BTC is printing several divergences on the indicators, while exploding to higher highs. This tells me that the end of this rally could definitely be very close. We aren't going to go up forever. So, we have to use indicators and other tools to know when it's time to take profits.
As I said above, I'm not saying that BTC is going to fall right now. BTC is in a very clear uptrend. I'm just showing that there is weakness building in the underlying indicators, and that isn't really supportive of a continuation in this parabolic move we are having.
So, if BTC does start to correct here, we have to wonder how bad it could really get. If you're a bull or a bear, it doesn't matter. We all need to assess the upside potential, as well as the downside risk. So, looking at the recent action, I can see that there is a potential for BTC to be in the process of building a head and shoudlers pattern right now. The left shoulder (LS) could have been formed already, and we may be half way through forming a head (H.) I'm not saying that's what's happening. There is definitely not enough evidence to support it yet. I'm just assessing the possibility here.
Strictly for the purpose of understanding the potential downside risk, while knowing that our indicators are showing weakness, let's look at how big this POSSIBLE head and shoulders pattern could be, and where the target would be.
As you can see, I have used arrows to show what the other side of a head and shoulders pattern here could look like. Just a completion of the head, would take us all the way down to the low 7000's. Then we would have to form a right shoulder (RS) and then print a breakdown below the neckline. Interestingly, I can see how the top of my blue downtrend channel could serve as the neckline region. So, we can take a measurement of this potential head (pink dashed vertical line) and subtract it from where the breakdown level would be. When we do that, we can see that it would literally take us all the way back down towards 3000.
Don't think for one second, that downside risk doesn't exist — because it definitely does. When the NVT finally throws a hard sell signal, we could easily see a catastrophic fall like this. Remember, never before in the history of Bitcoin, has the NVT failed. That doesn't mean that it can't fail. That just means that it has a great track record thus far. So, I am very cautious right now, and I think we may be approaching the end of this move. However, we need to see some confirmation candles to support that.
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.***
-JD-
Looking at the daily BTC chart, we can see that BTC is printing several divergences on the indicators, while exploding to higher highs. This tells me that the end of this rally could definitely be very close. We aren't going to go up forever. So, we have to use indicators and other tools to know when it's time to take profits.
As I said above, I'm not saying that BTC is going to fall right now. BTC is in a very clear uptrend. I'm just showing that there is weakness building in the underlying indicators, and that isn't really supportive of a continuation in this parabolic move we are having.
So, if BTC does start to correct here, we have to wonder how bad it could really get. If you're a bull or a bear, it doesn't matter. We all need to assess the upside potential, as well as the downside risk. So, looking at the recent action, I can see that there is a potential for BTC to be in the process of building a head and shoudlers pattern right now. The left shoulder (LS) could have been formed already, and we may be half way through forming a head (H.) I'm not saying that's what's happening. There is definitely not enough evidence to support it yet. I'm just assessing the possibility here.
Strictly for the purpose of understanding the potential downside risk, while knowing that our indicators are showing weakness, let's look at how big this POSSIBLE head and shoulders pattern could be, and where the target would be.
As you can see, I have used arrows to show what the other side of a head and shoulders pattern here could look like. Just a completion of the head, would take us all the way down to the low 7000's. Then we would have to form a right shoulder (RS) and then print a breakdown below the neckline. Interestingly, I can see how the top of my blue downtrend channel could serve as the neckline region. So, we can take a measurement of this potential head (pink dashed vertical line) and subtract it from where the breakdown level would be. When we do that, we can see that it would literally take us all the way back down towards 3000.
Don't think for one second, that downside risk doesn't exist — because it definitely does. When the NVT finally throws a hard sell signal, we could easily see a catastrophic fall like this. Remember, never before in the history of Bitcoin, has the NVT failed. That doesn't mean that it can't fail. That just means that it has a great track record thus far. So, I am very cautious right now, and I think we may be approaching the end of this move. However, we need to see some confirmation candles to support that.
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.***
-JD-