In the 15 minute chart we can see a very bullish pattern forming – an inverse head and shoulders. If it is confirmed (breaking ~$81) we will see a quick price movement on heavy volume up to the $100 range.
The inverse head and shoulders is a bullish pattern that indicates a trend reversal from the previous bearish sentiment. It consists of a neckline indicating the upper portion of the range, two shoulders, and a head between them. The left shoulder in the above graph is fully formed occurring around the mid 70′s, and consisted of moderate volume. The head occurred in the mid 50′s with fairly heavy volume, and the right shoulder is only half formed currently with with light volume. To confirm this, we would expect there to be light volume through the top of the neckline, and a breakout with heavy volume to ~$100 range. Re-testing the neckline (a pull back to ~$81) during the breakout before the full move is completed would not be unexpected.
This pattern is further reinforced by the double bottom that occurred over the last few days. We can see it below in the 4hour chart:
How long will it take for this pattern to realize? The shoulder seems to have extended down and the market has yet to overcome the $81 resistance of the neck.
We’re looking for symmetry from the left shoulder to the right. Given that the first shoulder took 4-5 hours, we’re looking for a similar time frame to test the neckline again. It’s best to wait until the patterns are confirmed (here would be a retest of $81) to act on them. We wouldn’t consider this bullish unless the second shoulder was formed and $81 broken.
Right again!
Just wondering how and where you learned about market trends. You guys are pretty spot-on.
How very kind of you. Our team is comprised of past Wall St. traders and engineers who have been involved with bitcoin for years. We don’t always have time to write up a post, so be sure to follow us on Twitter for live, brief updates.