It’s been a strange few days in the bitcoin price space. A number of fundamental developments seem to have reversed the negative general sentiment from the beginning of last week, and the bitcoin price looks to reflect this reversal.
It’s been a strange few days in the bitcoin price space. A number of fundamental developments seem to have reversed the negative general sentiment from the beginning of last week, and the bitcoin price looks to reflect this reversal. However, a look at the charts from a technical perspective suggests there could be some medium term weakness. We’ve detailed head and shoulders pattern before, but for our readers that haven’t come across these patterns in our analysis yet, they are a pretty common classical technical charting pattern used in more traditional financial asset trading. They come in two forms, with one being bullish and one bearish, depending upon the way they lie.
When a bearish head and shoulders pattern forms, we see a rise, peak, dip (left shoulder) followed by another rise, higher peak, dip (head) and finally, a repeat of the first part (right shoulder). The price action that underlies the pattern is supposed to represent a weakening of the current momentum, as defined by price failing to make fresh highs following a peak in an bullish pattern and fresh lows following a trough in a bearish pattern (the bearish form is the same as the bullish but upside down).
The way we trade the pattern is wait for completion, as defined by price breaking the neckline, which is the support that joins the troughs before and after the head peak. You can see some examples of this completion here and here.
Getting back to today’s action, we are currently mid way through the European afternoon session on Monday, and are heading into the region around which we would expect the bitcoin price to break the neckline. So, ahead of this breaking and a potential entry, let’s define our key levels, as well as take a look at the potential for a bullish entry if the pattern invalidates. As ever, get a quick look at the chart to get an idea of the numbers in question.
read more : http://www.newsbtc.com/2016/01/25/bitcoin-price-h-downside-on/
Topic: [2016-01-25]Bitcoin Price H&S; Downside On? (Read 242 times)
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