Head and Shoulders formation on MoneroXMR is one of my favorite projects and so I kinda feel bad shorting it but there is no virtue in losing money in the market as a trader. Often on charting you can look left to right to see what is going on but to get the best understanding I am going to go through how this chart actually developed so you can see it as I do.
The purple trendline has been on my radar for literally years and I was very excited to see it turn into support in early 2021. From there rather than develop a bullish pattern I see instead a bearish pattern develop, a massive seven month long head and shoulders and I see that purple line has roughly failed as support. Given my overall sentiment that crypto is bearish I am looking to short.
The Fibs set up my target setting from the a low on a rough neckline to the top of the head. There is a lot of wicking going on and so if price action breaks down and then has a relief rally a truer look at what the neckline was may be determined by the peak of that relief rally.
Next up is some volume analysis to verify the fib target. I chose just before the formation of the purple trendline. Picking the Volume profile is bit of an art and that worked for me. This visible range lets us see the 1.618 is at a high volume node. Given the low volume node right below it we have to possible scenarios either we consolidate there, get above the Upper Value Area and probably set a new all time high, or we progress to the high volume node at around $50.
A look at the moving averages shows that the $100 target is at the 300 week SMA, not a traditional SMA target. At that time frame and length the 300SMA is basically the 300 EMA as well.
A look at the Monthly Keltner channel suggest that we could get really close to $70 by the time this bear market is over. That would make this whole formation a massive consolidation channel.
Here is the formation I am using for my short entry. At 189 my margin sell order at 188 will be placed on the books. After that I will look at setting my take profit and stop losses.
