Frequently when looking at setups, charts, patterns, vertical and horizontal lines we forget to KEEP IT SIMPLE. Here we only look at the 50 period SMA, that's all. It's a very good predictor of how prices will move but is often overlooked. Price has clearly fallen below it BUT look at the action....it's very similar to what happened in February and twice in April:
Peak -------> controlled dump ------> sideways action -------> secondary smaller dump (apart from 2nd time in April) -------> price goes up. In Feb sideways action lasted for almost 2 weeks while in April it was 5 days each time.
I still think that price will go lower from here but will we break the neckline of the H&S pattern? If we do then the SMA will head south and that will be very very bearish. Next stop for BTC will be 6100 to 6300, then mid 5000's. Ofcourse this scenario can play out and there is evidence to support this (market is overbought, momentum is heading south, very low level of shorts, massive price increase in a short period of time etc).
If prices managed to climb up from this level reach and maintain 7500 then this would invalidate the H&S pattern and we would get above the SMA which would be very very bullish. I remember back in January when we had an inverse H&S pattern at the 4200 level and everyone was screaming buy only for prices to fall back towards the low 3000's. Frequently in crypto these 'obvious' set ups get invalidated very violently. Afterall we are in an uptrend, many missed out the price action over the last few weeks and are getting itchy trading fingers etc.
If we treat these three past events as a guideline for what's next then we can expect a few more days of sideways action, a little dump towards the neckline then a steady increase in prices towards the SMA followed by a very strong move up towards our resistance zone of low 8000's.
Whichever way it plays out it will be a very interesting week.
Peak -------> controlled dump ------> sideways action -------> secondary smaller dump (apart from 2nd time in April) -------> price goes up. In Feb sideways action lasted for almost 2 weeks while in April it was 5 days each time.
I still think that price will go lower from here but will we break the neckline of the H&S pattern? If we do then the SMA will head south and that will be very very bearish. Next stop for BTC will be 6100 to 6300, then mid 5000's. Ofcourse this scenario can play out and there is evidence to support this (market is overbought, momentum is heading south, very low level of shorts, massive price increase in a short period of time etc).
If prices managed to climb up from this level reach and maintain 7500 then this would invalidate the H&S pattern and we would get above the SMA which would be very very bullish. I remember back in January when we had an inverse H&S pattern at the 4200 level and everyone was screaming buy only for prices to fall back towards the low 3000's. Frequently in crypto these 'obvious' set ups get invalidated very violently. Afterall we are in an uptrend, many missed out the price action over the last few weeks and are getting itchy trading fingers etc.
If we treat these three past events as a guideline for what's next then we can expect a few more days of sideways action, a little dump towards the neckline then a steady increase in prices towards the SMA followed by a very strong move up towards our resistance zone of low 8000's.
Whichever way it plays out it will be a very interesting week.