Bitcoin Potential Double Reverse Head and Shoulder Bottom
There seems to be overwhelming bearish sentiment on social media, so is it a foregone conclusion the bears will get worse? Let's discuss.
On the hourly analog Bitcoin Bitfinex chart, price is essentially in the same place as yesterday. I had indicated that price could ride the blue 1 standard deviation (sd) line for a while before breaking down to the 50 hour moving average. Fortunately, this has been the story so far, but the question is which way will it break now?
I have placed two reverse head and shoulders formations on this hourly chart below and one of which had been completed yesterday, but the other stands a chance to complete and head upward bullishly tonight or by tomorrow Saturday morning EST.
Both patterns have a downward sloping neckline and decent volume to indicate that the trend is about to change on the each head and shoulder. However, the last right shoulder here on the bigger formation is lacking volume to convince me it’s going to breakout. The 1sd upward side of the pitchfork is providing good resistance and more importantly that dark blue horizontal line at $6,610.
The RSI indicator is fairly neutral at 49.51, but the MACD much more interesting. You can see how the blue trigger line is barely holding the 0 line bound, currently sitting at 0.40. If it breaks down through there you can expect further downward pressure.
Overall, it appears as if the trigger is line wants to curl up and bullishly reverse, but needs to some other players to join the bandwagon. The red lines on the histogram are also bullishly trending upward, but may be losing some steam the past few hours as well.
It’s a close call, but I am leaning bullish for now, especially given these potential reverse head and shoulders formations.
On the daily analog Bitcoin Bitfinex chart, there is not a whole lot that has changed. Yesterday’s close put in a nice bullish engulfing candle to signal a reverse of the trend. Today’s candle so far has a red doji signaling some indecision in the market, however does not mean a lot for one trend or another.
There was also a green indecision doji on Monday and look how much price fell on Tuesday and Wednesday. If going by that logic, a red closing doji today could lead to a more complete reversal especially in conjunction with the inverted head and shoulder patterns we have been looking at on the hourly chart.
The RSI is still just a shade from being oversold, sitting at 34.06 and appears to be showing a continuation of the downward pattern, however the MACD still has has some strong bullish divergence from the past few months. The histogram bars are also trending upward bullishly which are marked with a small purple line on the indicator.
The biggest indicator lacking right now is the volume, which would have to increase significantly over the next few hours to show a reversal.
If price does reverse, I think a bullish target of $6,800 is in the cards over the weekend and possibly closer to $7,100. If a breakdown occurs, there should be further support at the lime green down-trending line of $6,250. I have marked them with little targets.
Another potential point to keep an eye on would be the Bitcoin USD Shorts on Bitfinex. Back on April 12th when price popped about $1,300 dollars in one day, this large short squeeze candle was the main contributor.
Someone had see that the shorts were over leveraged and boy did they get squeezed out of their money hard. Something similar could happen again with the current run up in the short contracts. They are just a fraction from being overbought on the RSI at 68.41 and could withstanding losing some more money.
If the BTC price starts heading upward quickly, you can be sure this will be moving down inversely. Have a good weekend!
-More at Vanddar.com
On the hourly analog Bitcoin Bitfinex chart, price is essentially in the same place as yesterday. I had indicated that price could ride the blue 1 standard deviation (sd) line for a while before breaking down to the 50 hour moving average. Fortunately, this has been the story so far, but the question is which way will it break now?
I have placed two reverse head and shoulders formations on this hourly chart below and one of which had been completed yesterday, but the other stands a chance to complete and head upward bullishly tonight or by tomorrow Saturday morning EST.
Both patterns have a downward sloping neckline and decent volume to indicate that the trend is about to change on the each head and shoulder. However, the last right shoulder here on the bigger formation is lacking volume to convince me it’s going to breakout. The 1sd upward side of the pitchfork is providing good resistance and more importantly that dark blue horizontal line at $6,610.
The RSI indicator is fairly neutral at 49.51, but the MACD much more interesting. You can see how the blue trigger line is barely holding the 0 line bound, currently sitting at 0.40. If it breaks down through there you can expect further downward pressure.
Overall, it appears as if the trigger is line wants to curl up and bullishly reverse, but needs to some other players to join the bandwagon. The red lines on the histogram are also bullishly trending upward, but may be losing some steam the past few hours as well.
It’s a close call, but I am leaning bullish for now, especially given these potential reverse head and shoulders formations.
On the daily analog Bitcoin Bitfinex chart, there is not a whole lot that has changed. Yesterday’s close put in a nice bullish engulfing candle to signal a reverse of the trend. Today’s candle so far has a red doji signaling some indecision in the market, however does not mean a lot for one trend or another.
There was also a green indecision doji on Monday and look how much price fell on Tuesday and Wednesday. If going by that logic, a red closing doji today could lead to a more complete reversal especially in conjunction with the inverted head and shoulder patterns we have been looking at on the hourly chart.
The RSI is still just a shade from being oversold, sitting at 34.06 and appears to be showing a continuation of the downward pattern, however the MACD still has has some strong bullish divergence from the past few months. The histogram bars are also trending upward bullishly which are marked with a small purple line on the indicator.
The biggest indicator lacking right now is the volume, which would have to increase significantly over the next few hours to show a reversal.
If price does reverse, I think a bullish target of $6,800 is in the cards over the weekend and possibly closer to $7,100. If a breakdown occurs, there should be further support at the lime green down-trending line of $6,250. I have marked them with little targets.
Another potential point to keep an eye on would be the Bitcoin USD Shorts on Bitfinex. Back on April 12th when price popped about $1,300 dollars in one day, this large short squeeze candle was the main contributor.
Someone had see that the shorts were over leveraged and boy did they get squeezed out of their money hard. Something similar could happen again with the current run up in the short contracts. They are just a fraction from being overbought on the RSI at 68.41 and could withstanding losing some more money.
If the BTC price starts heading upward quickly, you can be sure this will be moving down inversely. Have a good weekend!
-More at Vanddar.com
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