BTC: Inverse Head-and-Shoulders Pattern
Bitcoin is displaying a standard reversal pattern on a short-term chart which could indicate bigger moves ahead.
On the 1-hour chart, Bitcoin shows some evidence of a possible reversal setup with an inverse head-and-shoulders pattern. A key break above the neckline at 5760 would be an ideal zone to watch. Conservative traders may want to wait to enter until the neckline, after being broken, pulls back to the neckline for a retest. Any failure to trade lower and back into the neckline should be the strongest confirmation necessary to confirm a higher entry. Ultimately, a return above towards 6700 and beyond 6800 would be the most ideal setup in the near future. Traders should watch this weekend and observe price action as Venus ends its retrograde cycle. Historically, Bitcoin has always experienced a strong bullish drive after the Venus retrograde cycle ends. I believe the combination of the impulse move lower on heavy volume combined with the Venus Retrograde cycle is one of the final elements required for the next drive higher.
Now there continues to remain some concern if the move could go lower and I believe that that is a strong probability. The move is certainly something that should be considered and it is one we have discussed and reviewed. The next supply zone sits below near the 4500-5100 value area. If prices do reach that zone, we should expect a large bounce off of that zone. And that is actually the price zone I think we should want to see Bitcoin enter for any big move ahead in the future. A move like the one we’ve been in is pretty normal and is indicative of a fake out. If you’ve ever used Keltner Channels or Bollinger Bands, then you’ve probably observed consolidation or the ‘squeeze’ on many charts and observe a false but large move lower. But when prices finally touch the lower Bollinger Band or the bottom of the Keltner channel, one can often see prices rally out and away from any further lower move. One of the dangers though is that we can sometimes see the move lower being a confirmation move lower and hold lower. It becomes a true move lower when prices are closing either outside the Bollinger Bands, lower, or closing on top of the bands.
Regardless, we should observe some powerful price action to continue moving into the weekend.