Potential H&S as Bitcoin continues to follow descending channel

Hi traders, thanks for taking the time to read this analysis.

In my last idea, I pointed out the double top pattern that was developing on Bitcoin and took a short from $12,300. For the pattern to be considered valid and see price reached the target of its measured move, we needed to see price break and close below the neckline. We did see this happen, however price bounced right back up above neckline. So while there is still a chance for the pattern complete, I do not want to lead my followers in the wrong direction and have them assume the price must reach target so I declared the pattern invalid (for now).

With that said, we can clearly see Bitcoin is still bearish despite the bullish charts that have been popping up over TV the last couple of days.
When we zoom out we can see this descending parallel channel that Bitcoin has stayed confined in.
Bitcoin has very clearly created a lower high and a lower low since the top price of $13,900 to define this channel.

When we look at the 4 hour chart we notice there is the potential Head & Shoulders pattern.
I realize there is also the larger, inverted Head & Shoulders that a few people have already posted about on TV. That of course is the bullish view, while mine shows the bearish potential which I haven’t seen many people notice yet.

Looking down at the MACD, we can see that as soon as that pump was over, the momentum quickly declined and has continued to decline since then. Now we are beginning to see the start of price decline as well.

If this H&S pattern plays out, the target for its measured move is shown by the red box below.
This is the first area of support I expect price to find, if it continues to fall then the next support will be the bottom of this large descending channel.

Now for this to work out, we really need to see price fall below neckline of H&S. Otherwise if we continue to move up then the bigger inverse H&S will most likely play out instead.

Good luck and thank you for reading my analysis. Please like if you found this idea useful!

註釋

Talk about good timing ;) Looks like the neckline of the H&S broke already, let's see how this plays out

註釋

And as predicted, the H&S ended up being the correct pattern to follow, not the Inverse H&S that many traders were looking at. The MACD histogram also fell below the 0 level as I pointed out could happen with the big divergence occuring.
So now the price bounced off the top of the red support box but it looks like it might fall a litle further to actually settle into my support range. If this box breaks, the next stop is the bottom of the descending parallel channel. However I'm not sure that support will hold either if we get down there for the 3rd time, the channel would most likely break to form a steeper downtrend.

註釋

Seems like the top of the support box (and neckline of double top pattern) is still holding price up so far. We may see a move up soon to re-test the bottom of this smaller channel before moving back down, and there seems to be some momentum shift on the 1hr.

註釋

And just like that, getting that channel re-test I was looking for before dropping again.

Easy long scalp while letting my short ride and enjoying some nice profits on that as well. Looks like the red support is already breaking too, let's see if the price can jump back in it, otherwise it will most likely freefall from here

註釋

We see price is consolidating inside that support box I put on the chart. Bears don't want to see price break above $9,900 to keep this downtrend intact.

註釋

But so far looking like a bear flag

註釋

Bear flag failed, but now price is hitting diagonal resistance and fib resistance. This whole move up looks just like the previous one up towards 10.2k, but I have to admit the bulls seem a little stronger this time. If the trend line breaks, price will most likely revisit 10.1k range

註釋

Price touched trend line and 0.618 as I pointed out could both act as resistance and then dropped back down. Now we are seeing a bounce from the 0.786 and it looks like that support box in my idea above is still going to be an area of consolidation as I mentioned previously.
We can also now see there is a nice bullish divergence forming on RSI after that drop. If RSI can stay above that trend line drawn below, then price might actually be able to break the descending trend line on price chart.

註釋

So perfect! My last update I pointed out the bullish divergence on RSI and how if RSI can stay above its own trend line, then price should be able to break that descending trend line on the chart and move up.

交易結束：目標達成

Perfect trade complete! The target of this Head & Shoulder pattern was obviously reached, and we even got a nice bounce right off my support area. Click play above to see how nicely this all worked out :)