Bitcoin A Rare Topping Pattern
Updated
It appears to me that bitcoin is topping and this is a significant top. It is known as a complex head and shoulders top and it is known this because it follows the same principle of a normal head and shoulders; however, there are multiple shoulders or multiple heads. It was difficult to spot for me due to the fact that the neckline is off, however, it can be clearly seen in ETH using a line graph:
My reasons for calling this a complex head and shoulder:
1.) The structure of this parabolic move was noted by the RSI trendline in purple. In light blue, we get the structure of the head and shoulder pattern, this clearly causes a divergence and it solidly breaks the trendline denoted by the parabolic move. It is the FIRST diverging structure that occurred in BTC in a significant amount of time and the first divergence that occurred is circled in light blue.
2.) The volume is decreasing and the shape distinctly resembles a head and shoulder pattern with 2 heads and two shoulders on each side and it has a neckline that slopes upward (an iconic trait of the head and shoulder pattern indicating the strength of the run)
Reasons to not call this a complex head and shoulder:
1.) The neckline is sloppy. It is very difficult to draw an accurate neckline; this is due the high volume drop from mid 7k to mid 6k. However, there was significant support, this can be noted because there was a large window (gap) on BTC! CBOE futures contracts.
2.) The shoulders on the right side are not clearly shaped.
Strength of the Pattern:
It is in my opinion that this pattern has a fair amount of strength to it, however, it is important to note that the neckline is sloped up, which means that there is significant bullish strength behind BTC. However, the right shoulders are small and which indicate bullish weakness, as generally the pattern is symmetric.
My reasons for calling this a complex head and shoulder:
1.) The structure of this parabolic move was noted by the RSI trendline in purple. In light blue, we get the structure of the head and shoulder pattern, this clearly causes a divergence and it solidly breaks the trendline denoted by the parabolic move. It is the FIRST diverging structure that occurred in BTC in a significant amount of time and the first divergence that occurred is circled in light blue.
2.) The volume is decreasing and the shape distinctly resembles a head and shoulder pattern with 2 heads and two shoulders on each side and it has a neckline that slopes upward (an iconic trait of the head and shoulder pattern indicating the strength of the run)
Reasons to not call this a complex head and shoulder:
1.) The neckline is sloppy. It is very difficult to draw an accurate neckline; this is due the high volume drop from mid 7k to mid 6k. However, there was significant support, this can be noted because there was a large window (gap) on BTC! CBOE futures contracts.
2.) The shoulders on the right side are not clearly shaped.
Strength of the Pattern:
It is in my opinion that this pattern has a fair amount of strength to it, however, it is important to note that the neckline is sloped up, which means that there is significant bullish strength behind BTC. However, the right shoulders are small and which indicate bullish weakness, as generally the pattern is symmetric.
Note
On the Lower time frame, a bear flag can be noted.Note
The orange curve is a possible upthrust due to the fact that bitcoin has a 4hr cup which could turn into a cup and handle pattern and it may attempt to break the structure of the flag. It also may break the structure of the flag.Order cancelled
Due the big news surrounding Google, Ethereum, and Chainlink, this pattern is probably negated.
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