DOTUSD BEAR! Head and Shoulders formation confirmation imminent?

17 февр. 2022 г.

In the chart I have highlighted the key areas of the head and shoulders classic formation for DOT. Using a four hour candle chart, it appears that all, or at least most of the key characteristics of the pattern are present with the pattern one key step away from full confirmation. This is my first published chart, and I am not an expert quite yet on technical analysis so I am open to constructive criticism in my analysis of this pattern and my assumptions regarding it. If any of what I show or say in the chart is not correct please correct me! To the point now!- As seen in the box drawn you can see the namesake of the pattern clearly; two shoulders and a hear, with the neckline drawn at the resistance points before and after the head. The Head and Shoulders pattern is a highly effective pattern for predicting a downward shift in a securities value. The pattern must meet other criteria outside of the visual "head and shoulders" look on a chart. Other key indicators that can assist in verifying a true H&S include analysis of the trading volume as the formation unfolds. The left shoulder you will see increasing trade volume, this is text book from my research and study and also leads into the trading volume analysis within the "head and right shoulder. Trade volume is falling throughout the formation of the head and falling again throughout the right shoulder formation. From my minimal but diligent studying, these indicators must all be present for it to meet the criteria for a true H&S. Lastly, for the pattern to be truly confirmed, once the right shoulder is complete the price must break the resistance of the neckline, once this takes place a downturn is likely just a few candles away. As I am writing this the price seemed to have temporarily punched through the neck, but not to the extent that I would call it 100% confirmed, but I am fairly confident that event may be happening at this moment or will soon become a reality. If the price were to bounce and not break the neck then by definition I do not believe this would "qualify" as the H&S pattern. Thought this was very interesting and could be potentially helpful and somewhat educational for some, and hopefully I am able to help some of you out there either avoid some losses or even better, help some of you make some money via shorts. Thanks for taking a look. Please let me hear your feedback about this analysis, if it is good info/bad info/ or helped you to make or save money during a downward price move.