BTC has formed what looks to be a head and shoulders formation on the Daily, indicating more pain could be ahead for the OG crypto that's down 37% from it's peak earlier this year.
The typical way to trade a head and shoulders pattern is to sell when we see a break through the neckline, which is currently acting as support but a break of this level could see price drop to the previous key level around 30k.
That is, of course, if you consider the huge wick on December 4th down to the neckline to be a valid component this formation.
If we use a line chart, ignoring the lows of the day and just focusing in on the closes, it changes the formation completely. This gives us just a second touch of the neckline, with a right shoulder yet to form. If this is the real pattern forming, we could see a surge back to the ~52k level in the coming weeks.
The market is reaching a decision point, and price action driving us above or below this support level/neck line will give the indication of a short term trend we can jump on.
The typical way to trade a head and shoulders pattern is to sell when we see a break through the neckline, which is currently acting as support but a break of this level could see price drop to the previous key level around 30k.
That is, of course, if you consider the huge wick on December 4th down to the neckline to be a valid component this formation.
If we use a line chart, ignoring the lows of the day and just focusing in on the closes, it changes the formation completely. This gives us just a second touch of the neckline, with a right shoulder yet to form. If this is the real pattern forming, we could see a surge back to the ~52k level in the coming weeks.
The market is reaching a decision point, and price action driving us above or below this support level/neck line will give the indication of a short term trend we can jump on.
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