Bitcoin sure likes to blaze it or so it would seem. The price is back around the 420 area where it reached in November 2015. Ever since the Mike Hearn news, Bitcoin has been struggling to break the $400 resistance, but it finally managed to do so just in time for Valentine’s day and while most speculators on BitcoinTalk tend to agree that this is the new floor for the crypto, I’m a little worried about the head and shoulders pattern that’s forming on the hourly charts.
Head and shoulders on 1H
As I’ve stated before I’m a Bitcoin permabull and would love to see the cryptocurrency rise to an all time high this year. I was super excited to see the breakout on Valentine’s day, but it’s possible that this is about to turn south real quick due to the formation of a very popular chart pattern known as the head and shoulders. Have a look at the chart below to see what I mean.
A great source for learning, Investopedia, explains it pretty well. Basically if the neckline is broken, we can expect a more serious downward movement to take place. Right now it doesn’t look like the neckline is broken just yet, but it’s definitely getting closer due to the selling power increase as indicated by the red bars at the bottom of the chart.
Fundamentals bearing more weight
There’s been plenty of good news on the media surrounding Bitcoin lately and it’s the main reason the cryptocurrency is rising right now. I’ve also noticed that the technical traders are getting burned more often than before with not just trading Bitcoin but pretty much everything else.
For example the popular forex pair EUR/USD surprised many seasoned technical traders this year with a massive surge upward and while I’m not qualified to really speculate on the matter, I saw a very influential trader post on the Forex Factory forums that technical trading is getting more and more difficult to the point where it no longer makes sense to be involved at all. So perhaps the 2016 financial crisis will remove most technical traders out of the equation for Bitcoin as well?