Bitcoin Breakdown?
From it's low on 15 September to it’s 21 October high, Bitcoin gained over 110% - surely it's due for a significant correction right!? Not necessarily, but here's what we need to look out for…
Rising wedge - The orange trend lines create a rising wedge pattern. The upper orange trendline is a key longer-term resistance trendline linking all significant previous highs since May this year. Rising wedges are bearish patterns and a break below lower orange line would likely signal further downside.
Head & Shoulders - Look to sell a break of the neckline. There will be support at the red dotted line as this is the level of the previous low. It is possible we will see a bounce here back up to the extension of the neckline before moving downside to targets. Target 1 lines up with previous local high as well as the 0.382 Fibonacci retracement. Target 2 signals the completion of the head & shoulders pattern and lines up with the 0.5 Fibonacci retracement. Stop the trade should there be a clear break back above the neckline as this would indicate a failed head & shoulders.
Furthermore, as a long term Bitcoin bull, Target 1 and 2 are good levels for long term accumulation regardless of whether or not you choose to take up this trade.
Rising wedge - The orange trend lines create a rising wedge pattern. The upper orange trendline is a key longer-term resistance trendline linking all significant previous highs since May this year. Rising wedges are bearish patterns and a break below lower orange line would likely signal further downside.
Head & Shoulders - Look to sell a break of the neckline. There will be support at the red dotted line as this is the level of the previous low. It is possible we will see a bounce here back up to the extension of the neckline before moving downside to targets. Target 1 lines up with previous local high as well as the 0.382 Fibonacci retracement. Target 2 signals the completion of the head & shoulders pattern and lines up with the 0.5 Fibonacci retracement. Stop the trade should there be a clear break back above the neckline as this would indicate a failed head & shoulders.
Furthermore, as a long term Bitcoin bull, Target 1 and 2 are good levels for long term accumulation regardless of whether or not you choose to take up this trade.
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