Bitcoin showing signs of a Double Top Formation
Hi guys,
Thanks for taking the time to read this analysis. Today I want to talk about what looks like a double top formation on Bitcoin.
To be honest, the drop initially took me by surprise but as soon as I started to notice what was happening here on these higher time frames I decided to close all my longs and open a short at $12,700.
Let’s discuss why I made this decision.
The obvious pattern formation here is a double top formation. Now this pattern isn’t considered valid until the neckline is broken so those who want to take a more conservative approach will wait for a break of the neckline (and possible re-test of neckline).
When we look at the RSI and MACD we can clearly see heavy bearish divergences. If you remember my post on June 19th, I pointed out a bearish divergence on daily time frame but noted how it might not matter again just like the previous time it appeared (early May 2019) based on the price structure as well as the current strength of the bulls. This time is a bit different though. We saw the parabolic run up to 13,800 as a result of FOMO buying from retail traders and this was followed by a swift selloff with heavy volume. The second move up initially looked strong, but we can clearly see volume dropping off on the way up, and then another big surge in selling volume when it reversed.
That type of pattern, with this loss in momentum shown by the indicators tell me that that second top was simply the bulls last opportunity to sell their Bitcoin and take profits at these prices.
Looking back to early 2018, we can see the same double top pattern with bearish divergences there as well.
Those that have been following me since then might remember I posted this idea, which worked out perfectly:
While the market was a bit different then as it was in the midst of a bear market, the market right now seriously needs some cooling off, even if it is just a temporary bear move down that only lasts a few weeks to a month or so.
If we can confirm a break and close below neckline, we will be targeting the $7,500 range which is calculated from the measured move.
The measured move on a double top is determined by calculating the percentage move from double top down to the trough (or neckline) and then applying this same percentage from the neckline down.
So in summary, we can clearly see the signs of a double top formation however we will need price to break and close below the neckline to confirm this pattern.
If you found this idea useful, please give it a like! Thank you!
Thanks for taking the time to read this analysis. Today I want to talk about what looks like a double top formation on Bitcoin.
To be honest, the drop initially took me by surprise but as soon as I started to notice what was happening here on these higher time frames I decided to close all my longs and open a short at $12,700.
Let’s discuss why I made this decision.
The obvious pattern formation here is a double top formation. Now this pattern isn’t considered valid until the neckline is broken so those who want to take a more conservative approach will wait for a break of the neckline (and possible re-test of neckline).
When we look at the RSI and MACD we can clearly see heavy bearish divergences. If you remember my post on June 19th, I pointed out a bearish divergence on daily time frame but noted how it might not matter again just like the previous time it appeared (early May 2019) based on the price structure as well as the current strength of the bulls. This time is a bit different though. We saw the parabolic run up to 13,800 as a result of FOMO buying from retail traders and this was followed by a swift selloff with heavy volume. The second move up initially looked strong, but we can clearly see volume dropping off on the way up, and then another big surge in selling volume when it reversed.
That type of pattern, with this loss in momentum shown by the indicators tell me that that second top was simply the bulls last opportunity to sell their Bitcoin and take profits at these prices.
Looking back to early 2018, we can see the same double top pattern with bearish divergences there as well.
Those that have been following me since then might remember I posted this idea, which worked out perfectly:
If we can confirm a break and close below neckline, we will be targeting the $7,500 range which is calculated from the measured move.
The measured move on a double top is determined by calculating the percentage move from double top down to the trough (or neckline) and then applying this same percentage from the neckline down.
So in summary, we can clearly see the signs of a double top formation however we will need price to break and close below the neckline to confirm this pattern.
If you found this idea useful, please give it a like! Thank you!
Comment:
Seems everyone is turning bearish on TV now, most popular ideas are bearish by top authors. This concerns me as market tends to go against the herd. Don't be surprised if we see price jump up today or tomorrow to shake out the retail bears
Comment:
Price is at this long term ascending trend line now. We should see a bounce up from here. If it breaks and closes below that line price will approach the neckline of double top very quickly.
Comment:
Click play. Price just tapped the neckline overnight. Let's see if it can break the neckline. Once we get a break (and candle close) below neckline, we should be on our way to the measure move target on chart.
Comment:
We're getting a pretty strong bounce today for a few reasons. Price bounced off the 50MA on the daily, it also bounced from the neckline of the potential double top pattern as I mentioned earlier. Right now the price has come up to re-test the ascending trend line on the daily. If we break this trend line, then the drop below it was just a fake-out and we will be looking at $11k resistance next
Comment:
Crazy short squeeze going on. I had a feeling over the last couple days we might see something like this with all the bearishness all over TV, I mentioned that in my update 2 days ago.. Anyways I'm still bearish up to 11.2k but if we break that with high volume then I'll probably close my shorts. BTW price broke back above that rising trend line, so uptrend is technically still intact on the higher time frame.
Comment:
Price is back at the neckline again, this time with even higher sell volume. It should break below it this time around, but let's keep an eye on it
Comment:
Great job bears, the neckline has been broken! This confirms the double top formation, and chances are very high we see price reach $7,500. Of course anything can happen in crypto, but now probability is in favor of the formation completing
Comment:
Should see another short squeeze now on the retail traders who shorted late. I'm expecting price to jump to 9,600-9,800 before resuming downtrend
Comment:
In case price breaks 9,800, I think 10k will be top for today. Good chance we see a re-test of the neckline and the 50MA on daily. This will be in this zone seen here:
Comment:
This area I showed yesterday as resistance seems to be holding up so far. Bulls keep trying but continue getting rejected. Bears want to see a strong push down with selling volume now to continue the downtrend
Comment:
Bitcoin dominance starting to make a drop as well. It looks like it's breaking down that rising wedge I showed the other day: charts.cointrader.pro/snapshot/LLFtE
Comment:
And just like that the whales pop this thing back over the neckline, hitting everyone's stop loss and liquidating those over-leveraged. Let's see how far they can pump it before bears step back in. Now that we are back over 10k, all bets are off for this double top pattern reaching completion
Comment:
Decided I would close my shorts from 12.3k. Might as well take some profit when unexpected price movements like this happen. Market was just too bearish lately, it's so easy for these big guys to move the market against the herd and cause this swift movement from stop losses being hit on the way up. I don't want to say this pattern has failed yet but if the bears can't bring this price back down below 10k in the next day or 2 then it will be a failure. Bears are still in favor on the bigger time frames, but we will have to wait and see how this plays out
Comment:
Interesting to see such weakness in Bitcoin again. Perhaps it really was just a short squeeze. We've seen fakeouts around the neckline of double top patterns before (even in my 2018 example on the left) and this could be another example of that. I re-opened a short last night mostly to scalp but I'm thinking about staying in it if the bears can push this down in the next couple of days as I mentioned in my last update. The most important thing is obviously to see price get back below the neckline!
Trade closed manually:
Unfortunately for the bears, this double top pattern never completed. Price action below the neckline was just a fakeout and the bulls were able to push it right back above it. Since the pattern has failed, the shorts are also closed and we will wait for a better entry to short if we even get one! If price can close above 11k then this is most likely the end of the bearish correction and the market will just continue to move higher.
Comment:
Maybe Double Top still in play? When we look at this downward channel we see price got rejected right in the middle of channel. We can also see bearish divergences on 4hr on the MACD and Sentiment Index. I've noticed lately we are seeing a lot more divergences on MACD and Sentiment Index have an impact on price movements even we there are no divergences present on the RSI. Now we still have this local uptrend intact so I don't want to call any shots yet. But if the bulls can't break $11k then I don't think this bearish correction is quite over with yet.
Comment:
A lot of posts on TV showing an inverse H&S pattern developing. What about this head & shoulders pattern? Would be interesting to see how this plays out. We would need price to break and close below 10,300 for this to be valid:
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New idea:
Comment:
That H&S pattern in my latest idea played out perfectly! (see above)
Now looking back at this double top idea, we can see the price is right at the neckline once again. Typically, these break down if price comes back down to attack it again. Keep an eye on this, because now bearish momentum is slightly higher than last time we reached neckline so I am not anticipating as big of a bounce off of it if we have one
Now looking back at this double top idea, we can see the price is right at the neckline once again. Typically, these break down if price comes back down to attack it again. Keep an eye on this, because now bearish momentum is slightly higher than last time we reached neckline so I am not anticipating as big of a bounce off of it if we have one
charts.cointrader.pro/snapshot/wClfO