Double Top Formation - More Downside Is To Come
Classic Double Top Formation On 4HR Chart
Double top formations are some of the easiest to learn and trade as beginners and experts. They typically consist of price rallies within a time span that reach a relatively similar price level, and have a definitive pullback between the two. Here, as we take a look at the 4HR candles, we can see that we have an easily recognizable double top formation. When trading a double top formation, the trader is waiting for a breakout below the lowest point in the pullback. Therefore, in order for this double top formation to be complete, we need a breakout below the pullback's price level
When the price does happen to dip below the breakout level, we can use simple math to estimate a price target for how low it can ( and should) go.
When creating price targets for double tops, the pullback lowest price level is subtracted from the average peak of the price rallies. To keep things simple, I have taken the numbers below when creating price targets.
Average Peak of Price Rallies : $9100
Pullback Low Price Level : $8400
Breakout Level : $8400
$9100 - $8400 = $700
Price Target : $8400 - $700 = $7700
For now, I will set Price Targets in the range of $7750 - $7550. The gray boxes indicate both the price range of the top of the double top formations, and the price target for the pullback beyond the breakout level.
Supplemental Information :
It is helpful when trading to take a look at several signals, ensuring that the trader does not get blindsided by obvious increases in volume or a hidden change of direction not always easily recognizable on the chart itself. I have listed the Stochastic RSI and the MACD below to aid in helping you make a well rounded decision. On the Stochastic RSI, it is clear that we have a lot of room for downward momentum ahead of us. On the MACD, we also have some downward pressure that should be helping us along in the direction of completing a textbook double top formation. It is also good to note that we have moderate supports along the route to $7700, but nothing that should staunch BTC in its march down to complete this double top. However, I don't feel that BTCUSD is capable of much more downward movement beyond $7600, as there is heavy support around that level.
If you feel like this was helpful and would like to donate so that I can continue to put out more ideas, feel free to donate to the address below!
BTC:
Double top formations are some of the easiest to learn and trade as beginners and experts. They typically consist of price rallies within a time span that reach a relatively similar price level, and have a definitive pullback between the two. Here, as we take a look at the 4HR candles, we can see that we have an easily recognizable double top formation. When trading a double top formation, the trader is waiting for a breakout below the lowest point in the pullback. Therefore, in order for this double top formation to be complete, we need a breakout below the pullback's price level
When the price does happen to dip below the breakout level, we can use simple math to estimate a price target for how low it can ( and should) go.
When creating price targets for double tops, the pullback lowest price level is subtracted from the average peak of the price rallies. To keep things simple, I have taken the numbers below when creating price targets.
Average Peak of Price Rallies : $9100
Pullback Low Price Level : $8400
Breakout Level : $8400
$9100 - $8400 = $700
Price Target : $8400 - $700 = $7700
For now, I will set Price Targets in the range of $7750 - $7550. The gray boxes indicate both the price range of the top of the double top formations, and the price target for the pullback beyond the breakout level.
Supplemental Information :
It is helpful when trading to take a look at several signals, ensuring that the trader does not get blindsided by obvious increases in volume or a hidden change of direction not always easily recognizable on the chart itself. I have listed the Stochastic RSI and the MACD below to aid in helping you make a well rounded decision. On the Stochastic RSI, it is clear that we have a lot of room for downward momentum ahead of us. On the MACD, we also have some downward pressure that should be helping us along in the direction of completing a textbook double top formation. It is also good to note that we have moderate supports along the route to $7700, but nothing that should staunch BTC in its march down to complete this double top. However, I don't feel that BTCUSD is capable of much more downward movement beyond $7600, as there is heavy support around that level.
If you feel like this was helpful and would like to donate so that I can continue to put out more ideas, feel free to donate to the address below!
BTC:
Uwaga
It appears that BTC is nearing the breakout region. I have not stepped in to actively trade this setup just yet however, as I am waiting for a confirmed close of (at minimum) an hourly candle below the breakout line. Although BTC is clearly flirting with the breakout line, a closed candle is often necessary to ensure the chart formation will be fulfilled.
I will wait for an hourly candle close below the $8400 to $8300 range before I enter this trade.
Zlecenie aktywne
Bitcoin has now successfully closed a few hourly candles below the breakout region. I am actively trading now, and currently waiting for a target reached of $7700. Also to note, on Binance is the inverse correlation between DGD and BTC. As BTC takes a dive, DGD is rising rapidly. If you don’t have the opportunity to short BTC, DGD could also play as a good option.
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Wyłączenie odpowiedzialności
Informacje i publikacje przygotowane przez TradingView lub jego użytkowników, prezentowane na tej stronie, nie stanowią rekomendacji ani porad handlowych, inwestycyjnych i finansowych i nie powinny być w ten sposób traktowane ani wykorzystywane. Więcej informacji na ten temat znajdziesz w naszym Regulaminie.