The double bottom scenario from played out nicely from my updated Bitcoin analysis, bouncing up almost 700 points. It did however not really reached it's target and on top of that, it also took quite some time before getting there. The volume on the way up is also far from convincing. These factors make me think that there is still a good chance the correction is still not done.
As i showed in my ETH analysis, there is a very big neckline around the 230 which is almost sure to be a very important zone. So i expect some reaction to happen when it breaks. For Bitcoin, we can say this level is around 7500. This H&S is not a beauty, but it's definitely there. The position of the neckline is an important factor as well, maybe just as important as the shape of the pattern.
There is however a bullish backup plan for this bearish H&S pattern. I have described this many times already the past year or 2, each pattern can be changed into something else. With an H&S, actually a after a failed breakout of an H&S (inverse or normal, so goes for both ways), it can turn into a wedge. So in this case, even if we would drop the coming days, if could still turn bullish. Very difficult to know this upfront, when you know how strong a trend is, you can judge it much easier. Like i did 6 weeks ago, where H&S pattern were popping up all over the place, but i was confident (you can never be sure) that it was a fake one. I had several back then for thinking it, this time i can't say the same unfortunately.
1) We stay above 7750/7800 and continue to go up 2) We break the 7500 but with normal/low volume and slower movement and we find support in the 7000/7300 zone and we going to see a big bullish wedge. 3) We break the 7800ish and we see a fast drop (with good volume), maybe make like a small bear flag around the neckline and then we see a big fast dump to like 7000 with very high volume. If this happens, the H&S is most likely to be real and we could go towards the 6200ish target.
Now what can we expect: As long as the 7800ish holds, it could mean this whole H&S pattern wont even be completed. So as long as we stay above that level, the bulls can choose to ignore this. In theory anything above 7450/7500 should tell us the same thing, i just personally favor bearish outcome a bit more when the 7800ish breaks. Let's assume the we go to 7500 and we break the neckline. There are a few factors that can help us determine which scenario is more likely to happen. I actually described most of the factors above already where volume and speed are the most important factors we need to look at.
Now even if this H&S plays out, it doesn't mean the bull trend is over. A correction to the 6000/6500 is IMO still a normal standard correction of the big rally we had the past months. Everyone who is screaming 3K or whatever, is simply guessing and making subjective assumptions. Just as i was bullish the first few months of 2019, i could not tell you if the rally would stop at 4600 or at the 5/6K levels. Again volume plays a big part in all of this. So i rather just take things step by step and go forward while things develop and hopefully getting signs in the meantime that can tell us what the next step will be. Also, the July 2018 fractal is still in full play as well. Yellow circle on the right is the position we are in now.
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Previous analysis:
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New Bitcoin analysis:
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New Litecoin analysis:
Dangerous low volume rally
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New BNB analysis:
Short term bearish wedge, long term possible bull flag
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Taking it's time but broke a small support now and from the looks of it, might be making a small bear flag. If it stays in the flag, chances are very big it will make another drop. If it crosses that red zone on the right, the bearish pressure might be gone for the short term at least. If we touch the 7500/450ish one more time, it will become very likely to see it break eventually. I don't think a rally will start when touching it again. So in other words, Bitcoin needs to make a higher low, otherwise the H&S or the Wedge version will play out.
Have to say, not big volume yet, also not for alts. But think it wont happen until we see a break of 7500 or 8200
Final note. There is one glaring thing I have noticed since January. Nothing works anymore. All my technical and pattern recognition has worked. Everything had failed. I have come to the conclusion that the best strategy in this bull mkt will be to go away and not try and trade. Sell only when you think the final top had occurred. In between will just end up hurting you. This is mo longer the bitcoin market of old, where the community actually traded. The reason I believe things have changed is the introduction of futures and institutions. They have taken over bitcoin and are taking it where they want. Manipulation is a good description. This also means bitcoin will go higher than most people believe.
GlenGoodman
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I agree, the Head & Shoulders is not a beautiful example but it can't be ignored. A strong directional thrust is likely whether it breaks the support line or fails and goes upwards instead.
botje11
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@GlenGoodman, yes exactly, fully agree with that assumption :)
fract
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Martens58
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Another note. The correction after the Bitfinex Tether problem "could" qualify as the retest of the 2x bottom requirement. We got as low as 6300 to 6400 at that time. 6300 is the 2x level. It would be unlikely that was the test, but it could have been. Another note is the 20wk passing thru the 50wk. That happens next week. Normally, a peak is formed that week and the following week is a corrective bar, then 1 to 2 weeks of sideways before resuming the bull mkt. So, taken together, the retest and the crossover, points to a resumption of the bull by late June, early july.
Martens58
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Just wanted to mention that there have been two times where you rallied hard off the major bear mkt lows since 2012. In both cases you broke the 2xthe low level, then came back to test that breakout. The current 2x level is 6307. The first break came back and went 2% below before resuming the new bull mkt. The second went 8% below before resuming the new bull mkt. So, that would imply a 5700 to 6200 level. It also happened fairly quickly; 2 to 4 weeks after a top. So, we are running out of time. A lot of other work suggests the 5500 to 6100 area also, with a minor stopping potential at 7000. Maximum downside is 5100 to 5200, if a wick happens.
cryptohopper
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Litecoin has already increased by almost 500% and it still has a bullish outlook. Will happen the same to Bitcoin with its next halving in one year?