As many people have theorized, there appears to be a very large head and shoulders formation in the making.
Looking at yesterday's candle, I was thinking that there may be a 50/50 chance of either breaking out of this downtrend and starting another Bull cycle or completing a perfect right shoulder at $6870 (.382 retracement) which would lead into a major price drop. According to popular thought on H&S formations, that would bring another downward move that is roughly equal to the "Head" of the H&S formation, leading to a price near $4000.
Today's candle has already wiped out most of yesterday's gains and may form a faux-bearish engulfing candle (there are almost never true bearish engulfing candles in BTC due to the 24 hour nature of the market, but I digress...) which would be worrisome me if I were a Bull.
A few other observations of this chart: The last week has shown high effort moves (blue box) as is evidenced by the lack of a discernible trend and long tails (both high and low) on most candles. This combined with relatively high volume (orange box) equals a lot of effort to raise the price from the low around $5900 a few days ago. High effort moves tend not to last very long...
Adding these factors together, the evidence points to another significant downward move in my opinion. If today's candles closes below yesterday's low then we will be looking at an imperfect right shoulder for this H&S formation. A strong break below $5900 would confirm this scenario. Strong break above $6900 would invalidate.
Stay vigilant out there...
Looking at yesterday's candle, I was thinking that there may be a 50/50 chance of either breaking out of this downtrend and starting another Bull cycle or completing a perfect right shoulder at $6870 (.382 retracement) which would lead into a major price drop. According to popular thought on H&S formations, that would bring another downward move that is roughly equal to the "Head" of the H&S formation, leading to a price near $4000.
Today's candle has already wiped out most of yesterday's gains and may form a faux-bearish engulfing candle (there are almost never true bearish engulfing candles in BTC due to the 24 hour nature of the market, but I digress...) which would be worrisome me if I were a Bull.
A few other observations of this chart: The last week has shown high effort moves (blue box) as is evidenced by the lack of a discernible trend and long tails (both high and low) on most candles. This combined with relatively high volume (orange box) equals a lot of effort to raise the price from the low around $5900 a few days ago. High effort moves tend not to last very long...
Adding these factors together, the evidence points to another significant downward move in my opinion. If today's candles closes below yesterday's low then we will be looking at an imperfect right shoulder for this H&S formation. A strong break below $5900 would confirm this scenario. Strong break above $6900 would invalidate.
Stay vigilant out there...