Bearish Pennant coupled with that H&S
Updated
#Bitcoin found support at the base of the ascending channel to potentially form the right shoulder of that H&S.
I mentioned in the previous post that we might not break channel support because there was hidden bullish divergence on the 4H so to watch the $3900 area for a possible rebound which happened at $3950, but price is now right at the apex of a large bearish pennant which gives us a potential breakdown target of between $2800 - $2860 and which is also a 138.2 fib extension from the height of the flag pole.
Without a break above $4600 the bears still have the upper hand and it doesn't look like the bulls have the momentum to even get above the $4500 yet. A move above $4500 invalidates this setup.
There has been gradually decreasing volume which doesn't give me much confidence in a move back above $4500 right now . I think when volume does come back, it will probably spike to the downside.
Not sure it will reach $2800 just yet because we still have strong levels of support around $3500-$3600 but ultimately I believe this is where btcusd is heading, possibly this month.
Before I consider the bottom to be in, I want to see a larger bearish volume spike than the one we had on 22 December 2017. We haven't had true capitulation yet and price hasn't reached our weekly SMA200 which is currently around $3100.
Once we reach the weekly SMA200, hopefully we get a swing low to around $2800 but a candle close back above the weekly SMA200. A close below $2800 will probably get messy. At least $2800 has been a major area of support and resistance in the past so hopefully should hold.
Good luck and happy trading!
I mentioned in the previous post that we might not break channel support because there was hidden bullish divergence on the 4H so to watch the $3900 area for a possible rebound which happened at $3950, but price is now right at the apex of a large bearish pennant which gives us a potential breakdown target of between $2800 - $2860 and which is also a 138.2 fib extension from the height of the flag pole.
Without a break above $4600 the bears still have the upper hand and it doesn't look like the bulls have the momentum to even get above the $4500 yet. A move above $4500 invalidates this setup.
There has been gradually decreasing volume which doesn't give me much confidence in a move back above $4500 right now . I think when volume does come back, it will probably spike to the downside.
Not sure it will reach $2800 just yet because we still have strong levels of support around $3500-$3600 but ultimately I believe this is where btcusd is heading, possibly this month.
Before I consider the bottom to be in, I want to see a larger bearish volume spike than the one we had on 22 December 2017. We haven't had true capitulation yet and price hasn't reached our weekly SMA200 which is currently around $3100.
Once we reach the weekly SMA200, hopefully we get a swing low to around $2800 but a candle close back above the weekly SMA200. A close below $2800 will probably get messy. At least $2800 has been a major area of support and resistance in the past so hopefully should hold.
Good luck and happy trading!
Note
There's that right shoulder. Price just broke the H&S neckline and dropped below pennant support. Just waiting for a retest of the neckline before the drop.Usually a H&S is a reversal pattern, however they can also be a bearish continuation pattern. Not very common but they do happen as in this case.
Note
Sentiment is bearish, however, Bitfinex shorts are rising and have fallen out of and retested a rising wedge which means we have a might have a short squeeze from here and a bounce to retest that pennant as resistance at around $4200. I think we'll be testing new lows if we drop from there but if we do manage to find support above $4200, I don't think we'll get above $4500 unless buying volume changes. You'll notice that buying volume has been gradually dropping after every bearish volume spike. We may find support at around $4150 if price does get to $4500.
Note
and there it is, the short squeeze has been initiated. I think 34 will be testing new lows if we drop from $4240, which coincides with EMA50 as resistance but if we do manage to find support above $4240, I don't think we'll get a close above $4510, which coincides with our EMA100 resistance unless buying volume returns. You'll notice that buying volume has been gradually dropping after every bearish volume spike. We may find support at around $4150 if we do get to $4500 but better to see what happens closer to then.
Note
*34 typo = we :)
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