The Head and Shoulders pattern that is forming on the 4H and D charts could have huge implications for the short and mid-term price movement of BTC. The short squeeze on 4/11 that propelled us to these ~9k levels was also able to help BTC break through the mid-term bear channel resistance from ATHs (BLUE line on the log chart). Price action in the last three days has formed an ascending wedge—a bearish pattern. The MACD is prime for a bearish crossover and our RSI is showing overbought BTC. A consolidation move is very likely at this point, and this is where things get interesting.
Once the price starts to dip to the low 8000s, we’ll be looking to test the BLUE trend line as support. I believe that a successful test of support around $8200 with a bounce back towards $8600 would indicate a bullish confirmation. If the price fails to find support at $8200 and continues to fall towards $7800 (neckline of the Head and Shoulders pattern), the next point of interest will be the retest of the BLUE trend line. Finding too much resistance near $8000-8200 would confirm the H&S and would make things very bearish and could signal another retest of the double-bottom support around $6000.
I’ve decided to go short from $8980 with profit taking at $8450 and $8250. A failed test of the BLUE trend line will signal a third sell target at $7850, and fully cashing out on the short position around $6600 for a very nice profit.
This ought to be an entertaining next couple of days.
- Peace -