Here's Why The Bitcoin Inverse H&S is Still Valid (BTC)
Updated
Hi friends! Welcome to this quick update analysis on BITCOIN! Let's get right to it! Looking at the four hour chart, you can see that the break above the triangle formation yesterday didn't hold. Instead, we saw a reversal back into the apex of the triangle, with a break back below the 20 EMA (in blue) the 50 EMA (in orange,) the 78.6% retrace, and then we even broke below the bottom of the triangle. To make matters worse, the current candle has rallied up into the 20 and 50 EMAs, and it has quickly reversed back to the downside, to produce what is currently an upside down hammer. This flip-flopping around the convergence of these support/resistance zones exemplifies weakness and indecision in BTC. The market is clearly undecided on whether or not it wants to hold or reject this zone. However, the 1200 EMA on the four hour chart (in purple) which is the 200 EMA on the daily chart has been tested and confirmed as resistance. So, not only was resistance found at the top of the red dotted triangle, but it was found at the 200 EMA on the daily chart, which is most definitely NOT a good thing.
I'm going to be blunt with you. I'd love to see BTC rally up, and complete this proposed head test pattern (in purple.) However, the reality of it, is that we remain in a very strong overall downtrend, but that doesn't mean that the head test wont complete itself, and lead to the long awaited breakout of the inverse head and shoulders pattern. With that said, there are several major resistance levels in the way of a completion of the head test, and until those levels start to fall, the overall bias remains to the downside. However, regardless of what you've been told, size DOES matter. What I mean, is that this triangle, is relatively small, when compared to the much larger inverse head and shoulders pattern, so in comparison, it is less significant. Some people have said "the inverse was invalidated a long time ago." But, technically, that's simply not true. Inverse head and shoulders patterns, as far as I'm concerned, are invalidated when the head is surpassed, but even that depends on the way in which the head is surpassed. For instance, you could have a head and shoulders pattern that forms, reaches the neckline, then reverses to rally high above the head, to form an even larger head, rendering the former head and shoulders pattern as the left shoulder in an even larger developing head and shoulders pattern. That's a pattern morph, or an extension, and it happens all the time. So generally, if the head is surpassed, the pattern is invalidated, but it should not be forgotten, in terms of future analysis. That's what I'm doing, by keeping this proposed head test in mind. I've shown how a similar movement occurred after the head and shoulders formation at the all time high, and now we have what appears to be an inverse mirror image of what was seen at the ATH. So yes, I am cautiously observing the potential of a completion of the head test, but as I've said, there are several major resistance levels in the way of making that a reality. If/when we stair step past those levels, we can increase our level of bullishness. Namely, we need to get above the 786, the 1200 EMA (which is the 200 EMA on the daily,) the top of the downtrend channel, the rising green trendline, and then the neckline of the inverse head and shoulders pattern. Until those resistance levels begin to fall, the bias remains to the downside. In fact, as long as we remain inside of the downtrend channel, I can tell you with 100% certainty that BTC will eventually be worthless. I bet that statement really puts the importance of rallying out of the downtrend channel into perspective.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-Magic loves you-
-JD-
I'm going to be blunt with you. I'd love to see BTC rally up, and complete this proposed head test pattern (in purple.) However, the reality of it, is that we remain in a very strong overall downtrend, but that doesn't mean that the head test wont complete itself, and lead to the long awaited breakout of the inverse head and shoulders pattern. With that said, there are several major resistance levels in the way of a completion of the head test, and until those levels start to fall, the overall bias remains to the downside. However, regardless of what you've been told, size DOES matter. What I mean, is that this triangle, is relatively small, when compared to the much larger inverse head and shoulders pattern, so in comparison, it is less significant. Some people have said "the inverse was invalidated a long time ago." But, technically, that's simply not true. Inverse head and shoulders patterns, as far as I'm concerned, are invalidated when the head is surpassed, but even that depends on the way in which the head is surpassed. For instance, you could have a head and shoulders pattern that forms, reaches the neckline, then reverses to rally high above the head, to form an even larger head, rendering the former head and shoulders pattern as the left shoulder in an even larger developing head and shoulders pattern. That's a pattern morph, or an extension, and it happens all the time. So generally, if the head is surpassed, the pattern is invalidated, but it should not be forgotten, in terms of future analysis. That's what I'm doing, by keeping this proposed head test in mind. I've shown how a similar movement occurred after the head and shoulders formation at the all time high, and now we have what appears to be an inverse mirror image of what was seen at the ATH. So yes, I am cautiously observing the potential of a completion of the head test, but as I've said, there are several major resistance levels in the way of making that a reality. If/when we stair step past those levels, we can increase our level of bullishness. Namely, we need to get above the 786, the 1200 EMA (which is the 200 EMA on the daily,) the top of the downtrend channel, the rising green trendline, and then the neckline of the inverse head and shoulders pattern. Until those resistance levels begin to fall, the bias remains to the downside. In fact, as long as we remain inside of the downtrend channel, I can tell you with 100% certainty that BTC will eventually be worthless. I bet that statement really puts the importance of rallying out of the downtrend channel into perspective.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-Magic loves you-
-JD-
Note
Here's a look at the head test after the all time high.Note
I realize that there is a certain level of risk involved in telling you that the inverse is still valid, even as we are finding overhead resistance at the 200 EMA on the daily chart. However, that doesn't technically invalidate the inverse. Until evidence of invalidation begins to materialize, such as a low that is lower than the trough of the head test, and especially a low that surpasses the lowest point of the head, on 2/6, the inverse head and shoulders formation is still valid. This is the same thing that I was telling everyone, when the head and shoulders formation at the all time high didn't immediately break down. Now, we all know what happened. The charts never lie, and until hard evidence emerges, that proves that the inverse is invalid, there is no reason to ignore it. Furthermore, if you want to claim how wrong I am, for keeping the inverse in mind, perhaps I should remind you about how I called the right shoulder perfectly before it even formed! I gave the exact bottom, which was on my green trendline, when every other analyst was criticizing it, then I called the reversal back up to the neckline perfectly. After BTC was rejected above the neckline, I gave you a perfect series of bear flags, each before their breakdowns occurred, and now, I'm showing you why the inverse is still valid. If you don't see the immense value in the accuracy of my analyses, then I don't know what to tell you. -Magic-
Note
Warning! BTC has found resistance at the MAs, and the MACD is expanding, under a bearish crossover, after falling below the zero line. All of this is happening, after BTC fell from the apex of a triangle formation (in red dots.) We currently appear to be forming a bear flag consolidation under the MAs. This action could cause BTC to fall to the 7200 range, or lower, if we continue to fall from here. Pay close attention, and stay on your toes.
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