The last article I wrote was on the 5/10/18, I talked about the Head and Shoulders pattern that had clearly formed. The pattern performed extremely well and was a good opportunity for the shorters, the breakdown found support at the around the $200bn marketcap, coinciding witht he left valley of the shoulder.
Where to from here?
I recently tweeted:
— TheGayTrader – PoSBS – Proof of Surprise Butt Sex (@TheGayTrader) November 1, 2018
The market has been squeezing tighter and tighter into a triangle formation, with neither large amounts of money flowing in or out, personally I see this as a good thing and a potential sign the bottom is in, or at least close. The cryptosphere/blockchain industry is alive and kicking with unprecedented innovation and growth, the general public are only sceptical about putting money into cryptocurrency as they see and hear about the significant drop in Bitcoin’s price. They’re more interested in buying bitcoin at $20k than at $6k.
On the 4hr time frame we can see the regions of support and resistance have reached a point of decision, as my tweet above stated my opinion is neither here nor there. There’s obviously going to be a move either to the upside or downside but I feel it will be of little significance and we will continue sideways in a consolidatory move. The longer the consolidation, the bigger the breakout.
I’d like to point out, if you’re trading the smaller time frames that, at time of writing, the market cap is currently tapping on the resistance of the upper region.
Here’s a look at the bigger picture, you can see another Head and Shoulders pattern forming, however this time it’s inverted meaning that a breakout is of bullish significance. However the right shoulder is overly stretched, a bit deformed. Watch for a break above the Neckline as that will likely be a good opportunity for placing longs, it would also (in my opinion) signify the reversal of this bear market. I’d like to see us follow along the lower support in that case.
One thing I have learnt and is shouted from the rooftops by experienced traders and investors alike is to trade with the trend.
Taking this advice at face value would indicate that the bear trend is more favourable. This period of consolidation may just happen to be a pit stop on the way down.
Notes from the editor @TheGayTrader aka FvKnL
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