Bitcoin: Reverse Head and Shoulders Continuation 1W (Jun. 04)

X Force Global Analysis:


In this analysis, we explore the long term bullish, yet short term bearish case of Bitcoin's weekly chart.

Analysis

- When in doubt, zoom out. On the weekly, we see a potential reverse head and shoulders continuation pattern, with the left shoulder and head potentially having already completed
- Unlike what most people think, (reverse) head and shoulders patterns can be both continuations and reversals, depending on the previous trend
- In this case, we see an uptrend from 3.1k up to 14k levels, completing the bullish trend
- The current reverse head and shoulders formation could be seen as a phase of consolidation
- Once we correct down from current levels to complete the right shoulder, it's highly likely that we see a bounce above the 200 MA on the weekly
- Historically, the 200 MA has served as historical supports of absolute lows on the weekly chart
- The reverse head and shoulders continuation pattern also lines up with our previous analysis of a parabolic U shape recovery, leading to a new bullish rally

Market Sentiment:

Long short ratios are at 67 to 33, with still significantly more longs than shorts.


What We Believe

Based on the reverse head and shoulders continuation pattern, one last corrective wave down to complete the right shoulder is anticipated, before the real bullish rally.

Trade Safe.