Is a large drop possible for Bitcoin?
Hello Everyone,
As alt coins are exploding, Bitcoin is starting to look not so great. There is a head and shoulders pattern forming on the daily chart which indicates a trend reversal in the short to mid term if confirmed. The neckline is around $52,500 and breaking it would confirm this pattern which would then lead to a movement to the downside. There are several factors giving validation to this pattern.
Here are the technicals:
1. There is a Head and Shoulders forming on the Daily Chart with a neckline of $52,500 area. Breaking this would indicate a short to mid term trend reversal most likely the low 40k to high 30k area or to my "Buy Zone".
2. MACD showed weak buying momentum and is now showing waning buying momentum. A bearish cross is possible. There is also bearish divergence as price was making higher highs and MACD tops were showing lower highs. MACD also failed to stay above the intersection point between buying and selling momentum. This indicates weak buying and further validates the right shoulder of the Head and Shoulders pattern.
3. RSI is showing bearish divergence as RSI is making lower highs as price is making higher highs. This indicates market exhaustion or in need of a cool off period.
4. Price Action: Price action is showing us a few things. Since the drop in late February, as price was moving up, volume was very stagnant and showing weakness or going down. This is bearish price action. This indicates market exhaustion or weakening of uptrend.
5. Dead cat bounce to retest $60,000 which gives more validation to the right shoulder of the Head and Shoulders pattern. Notice the largest pool of volume in these last 1.5 weeks came from a movement towards the downside.
With all of this said, Bitcoin still needs to break the $52,500 level to confirm the Head and Shoulders pattern. Bitcoin could easily bounce off $53,000 and continue upwards but the indications above are saying this is unlikely. I have thought bitcoin is overdue for a cool down period and a pullback to the low 40k to high 30k area would still keep Bitcoin very bullish. It has yet to test a 20 or 50 weekly moving average and it did so several times in 2017.
I hope this helps some of you manage your risk or helps your decision making in your next trade.
As always, manage your risk, be patient, and good luck trading!
As alt coins are exploding, Bitcoin is starting to look not so great. There is a head and shoulders pattern forming on the daily chart which indicates a trend reversal in the short to mid term if confirmed. The neckline is around $52,500 and breaking it would confirm this pattern which would then lead to a movement to the downside. There are several factors giving validation to this pattern.
Here are the technicals:
1. There is a Head and Shoulders forming on the Daily Chart with a neckline of $52,500 area. Breaking this would indicate a short to mid term trend reversal most likely the low 40k to high 30k area or to my "Buy Zone".
2. MACD showed weak buying momentum and is now showing waning buying momentum. A bearish cross is possible. There is also bearish divergence as price was making higher highs and MACD tops were showing lower highs. MACD also failed to stay above the intersection point between buying and selling momentum. This indicates weak buying and further validates the right shoulder of the Head and Shoulders pattern.
3. RSI is showing bearish divergence as RSI is making lower highs as price is making higher highs. This indicates market exhaustion or in need of a cool off period.
4. Price Action: Price action is showing us a few things. Since the drop in late February, as price was moving up, volume was very stagnant and showing weakness or going down. This is bearish price action. This indicates market exhaustion or weakening of uptrend.
5. Dead cat bounce to retest $60,000 which gives more validation to the right shoulder of the Head and Shoulders pattern. Notice the largest pool of volume in these last 1.5 weeks came from a movement towards the downside.
With all of this said, Bitcoin still needs to break the $52,500 level to confirm the Head and Shoulders pattern. Bitcoin could easily bounce off $53,000 and continue upwards but the indications above are saying this is unlikely. I have thought bitcoin is overdue for a cool down period and a pullback to the low 40k to high 30k area would still keep Bitcoin very bullish. It has yet to test a 20 or 50 weekly moving average and it did so several times in 2017.
I hope this helps some of you manage your risk or helps your decision making in your next trade.
As always, manage your risk, be patient, and good luck trading!
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