Placing Your Next Bitcoin Trade
You Bitcoin traders will likely enjoy this chart. Clarity is always a nice thing to find. Clean lines or mathematical points of perfection are things of beauty. So today after a great vertical price run in Bitcoin we saw price hit a weekly high that was noteworthy. Bitcoin has reached up to hit the .786 retrace level of its prior highs with near perfection and then stopped dead. It now looks set to reverse back down. How far is anyone’s guess but if this top holds all week you may want to dust off your bear plays and plan for some kind of pullback. It is worth mentioning that bitcoin tends to mirror the broad markets in its rise and fall. Just look how it performed during past market sell offs. So this chart may be confirming a larger story than just Bitcoins chart.
My eyeball view of this chart sees a classic H&S with an extremely weak right shoulder. All followed by a classic head test (this is an Oscarism for those who follow Oscar). Prechter has made the case that Bitcoin is similar to other assets in that it is simply an object of speculation driven by overall social mood. His claim is the when social mood turns down Bitcoin will follow.
What is not drawn on the chart is a H&S NL which extends to cap the rally of the headrest. It is not unusual for the headrest to actually penetrate the NL