BITCOIN IS FORMING A MASSIVE HEAD AND SHOULDERS ON THE DAILY!
Updated
Hello Traders,
This H+S has been staring me in the face for the last 10 days already so its time I made a chart about it.
As you can see, price since $13900 has been in a corrective wave pattern. That 3rd lower high at $12274 has dropped the price to the neckline of this H+S monster. I was expecting a bounce on the daily 100 MA to around the $10800 - $11000 region which is where the daily 50 MA is (acting as resistance) but from what I have seen so far this bounce is weak and i'm not sure price will make it.
All eyes are on that neckline. As with all H+S patterns it becomes valid on break of the neckline with high sell volume.
"IF" that neckline should break with decent volume I can see a brutal 30-35% drop happening, right down to my roughly drawn weekly 50 MA in purple, target $7000 to $6000.
Bulls have to hold that neckline and the daily 100 MA for the next 15- 20 days, preferably with the price going upwards. A break upwards past the diagonal downtrend lines would be bullish and would invalidate this TA but I personally don't see it happening.
This H+S has been staring me in the face for the last 10 days already so its time I made a chart about it.
As you can see, price since $13900 has been in a corrective wave pattern. That 3rd lower high at $12274 has dropped the price to the neckline of this H+S monster. I was expecting a bounce on the daily 100 MA to around the $10800 - $11000 region which is where the daily 50 MA is (acting as resistance) but from what I have seen so far this bounce is weak and i'm not sure price will make it.
All eyes are on that neckline. As with all H+S patterns it becomes valid on break of the neckline with high sell volume.
"IF" that neckline should break with decent volume I can see a brutal 30-35% drop happening, right down to my roughly drawn weekly 50 MA in purple, target $7000 to $6000.
Bulls have to hold that neckline and the daily 100 MA for the next 15- 20 days, preferably with the price going upwards. A break upwards past the diagonal downtrend lines would be bullish and would invalidate this TA but I personally don't see it happening.
Note
On the daily time frame I am looking at $10788 as a potential bounce target/short entry. Note
On the 4hr time frame price could try to bounce to the 50 MA and 100 MA cross. The 200 MA in red is acting as resistance for the moment. Should the price break up past 11k with bullish conviction then the bearish view would be over. Note
On the 1hr time frame things look a bit more bearish. These impulse waves look limp and are retracing deeply. "IF" the price does manage to break above the 4hr 200 MA at $10550 then it could rally to the $10800 - $11000 region. Note
Actually im just reading this back "On the 4hr time frame price could try to bounce to the 50 MA and 100 MA cross. The 200 MA in red is acting as resistance for the moment. Should the price break up past 11k with bullish conviction then the bearish view would be over." Nah its more bearish than that. The 7.236 fib is there (likely resistance) and 3 diagonal resistance trend lines, so yeh quite a bearish view.Note
Looking at momentum I cannot see any more hidden bull div on the daily RSI. Note
Bouncing on the daily 100 MA only produced a tiny amount of bull div on the 1 hr chart, too small to really call bull div tbh. This divergence is non existent on the 2hr-4hr charts, momentum is really not showing any bullish signs or strength here even though it has just crawled out of oversold regions. Note
Price is very close to my marked zone. There is room on the 4hr RSI for some more up but oversold on the 1hr. bear div is forming on 15 min. Note
And the 15 minute view... price wicked to my first red line at $10788 which is the 50 MA on the daily. Bearish div on the 15 minute. That marked zone is acting as resistance for the moment. Note
Rejection in the red boxed area as expected. I did think a wick wanted to touch the 100MA 4hr. Downtrend line also acted as resistance. Price has fallen back inside the rising wedge. Might still be a bit premature to label that 2 of 5 impulse wave down but I will for the moment... Note
A downtrend channel fits nicely around this price action, especially the way the price is interacting with the middle line of the channel. Note
Price is getting dangerously close to that neckline. Another H+S is forming here too. Note
Still bearish around this neckline. Price could try and bounce to here... Note
Weekly MACD looks close to a bearish cross. Note
Price finally broke the trend line and lost support of the daily 100 MA. Next logical place I am looking at for a price interaction would be the weekly 20 EMA and then daily 200 MA. Price has currently taken a break from dumping on that 5.618 fib which acted as support last time and the middle line of the channel. Note
This smaller H+S formed in the right shoulder of the massive H+S. This is a much more "normal" looking H+S and apart from that tiny wick near the left shoulder for perfectionists to moan about, this one has also broken with a "rough" technical breakdown target of -15 to -20% so around the daily 200 MA. Note
Something that is always in the back of my mind regarding this recent pump. Note
I just went through all historical price data for BTC since its creation. What I found is when price breaks the daily 100 MA it retraces to the daily 200 MA. On 2 occasions the price broke the 100 MA and did a 10% and 15% drop under that MA, not quite reaching the 200 MA. Price right now broke the 100 MA and has only dropped 5% at the moment.
Note
Well, this idea was going so well and as much as I hate to say it this recent BTC price move is totally screwing with the plan and forcing me to have a re think. That 5.618 fib is acting as strong support and the RSI did print bull div on the 4hr hence this move up. When a neckline breaks price does have a habit of coming back up to test the neckline. A bearish neckline rejection would have been the preferred move here and more consistent with this idea. However, price has made its way back ABOVE the neckline though the daily 50MA is there as resistance and price has wicked PERFECTLY on the 6.618 fib and its overbought on the 4hr. The blatant disregard for the neckline bothers me and Im going to re think this EW count. Price looks to be in a descending wedge also. 
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.