Possible massive inverted H&S forming on BTC

Possible massive inverted H&S forming on BTC

Since the retrace to $3,200 bitcoin has held the . 618 retracement from $3,650. This indicates we could be starting a potential impulse wave up.

Today while analyzing the charts for bitcoin , I noticed a potential inverse head and shoulders developing.
I was analyzing a fractal from November 22nd and noticed there are some similarities being printed in the current price action. That fractal can be seen here:

If this fractal plays out, we could see completion of a head with a test of the neckline at around $4,400.
I am not keen on this pattern though as lately, inverted head and shoulders have mostly always been fakeouts. I decided to post this anyway since I AM a permabull after all. 😉

In order for this pattern and count to be valid, we would first need to see a high volume break of the $3,600 resistance. To validate a wave 3, we would target the 1.618 Fib retrace located around $3,900.
For wave 4 price would ideally retrace around, and hold above the 50% Fib retrace at ~$3,615. Whales will often times stop hunt fresh longs during a wave 4, so we could see a potential wick further below the 50% Fib. If this were to happen, we would want to see the wick retrace on high volume , and ideally print a hammer or doji .
Finally, another high volume impulse up for wave 5 to test the neckline resistance located around $4,400.

Once the neckline is tested, we should retrace to former resistance turned support around $3,600 to create the right shoulder and a higher low.
Failure to stay above $3,600 once we break it will greatly jeopardize the chances of this pattern completing successfully.
There is a chance this could just be an ABC correction from the recent dump. If this were to be the case, I’ve estimated C wave to end right around $3,750.

TLDR:
We are in the process of creating a potential inverse head and shoulders . Immediate resistance is found at $3,600 and $3,900. Neckline is around $4,400. Support after neckline is tested will be found around previous resistance at $3,600. Completion of this pattern if validated brings a target of $5,600 USD or higher. Pattern invalidates if we form a lower low below $3,200.

At the moment my position is long from $3,350 with a stop just above the .786 Fib retrace of the current swing.

Published at Wed, 12 Dec 2018 13:30:10 +0000