Hi friends! Welcome to this update analysis on Bitcoin! let's get right to it! Looking at the daily BTC chart, we can see that Bitcoin is still trading in a sideways consolidation. As you know, we have been covering the fact that it could potentially be forming an inverted head and shoulders pattern (in green.) However, we could also simply be continuing the downtrend by forming another lower high. At this point, it isn't immediately clear which way the market will move, and the majority of traders are just waiting to see how this thing breaks.
As you can see, there is a potential for BTC to be forming a big bull flag (in black,) in what could possibly be the right shoulder of an inverted head and shoulders pattern (in green.) None of that is confirmed though. In terms of this potential bull flag, there is a jagged flagpole rise, with a perfectly parallel flag body. Rising from the lowest point of the head, you can see that there is a dotted black trendline support level that is intersecting this potential flag. Price is being compressed between the top resistance of this potential flag, and the rising support from the head (dotted black trendline.) So, if we see a breakdown below the rising black dotted trendline, I think that could quickly negate the potential of a bull flag. However, if we get a breakout above the top side resistance of this potential bull flag, we could see a sharp rally to the neckline of the head and shoulders pattern (in blue.) Such a move would complete the pattern, and from there, we would be looking for a breakout above the neckline for confirmation.
As I've been mentioning for several days, the 300 EMA (in orange) which is equal to the 50 EMA on the daily chart, is now beginning to converge with the neckline of the head and shoulders pattern. So, if price is able to rally up there, and break out above that level, I believe that we will see a powerful surge toward the top of the downtrend channel (in pink,) which would put us somewhere in the low 5000s.
As price moves closer to the apex formed by the top of the flag and the rising support from the head, we will see a break in one direction or the other very soon. A break below that rising support will likely cause an initial surge to the downside. However, there is still technically a decent potential that BTC is forming an inverse head and shoulders pattern right now. As I've said, we don't know for sure. So, I would wait to see a breakout before making any trades.
On the downside, if price fails to hold the 3000 level, we could see a powerful selloff in the market, potentially taking us down to 2000 or even 1100. That is definitely a short term possibility. However, I am still long-term bullish on Bitcoin and crypto in general. I think if we do see a powerful breakdown below 3000, we could finally see the sharp capitulation that everyone has been waiting for.
As the market chops sideways, we are all mostly unsure of which direction it will break. When it does break, the neckline of the head and shoulders pattern will be a key area of interest on the upside. On the downside, the 3000 level will be a critical level for the market to hold.
Happy New Year Everyone!
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
Here is the longterm support trendline i identified 10 months ago :
threeeyedfrog
⋅
And people will start buying BTC after reading this with the hope that Inverse H&S will form. It's important to wait till it breaks the neckline.
cromeo21
⋅
Thank you Magic for all your hard work and your analasis for the past year. Happy New Year to you and your family. Wish you have a very successful New Year.
Eye_of_Horus
⋅
Where did you get that pink trendline from? Wtf looks so irrelevant.
hellomyfriend
⋅
@SyedB69, may 5th, july 23rd , november 7th and 12th highs