Traditionally, you learn that Head and Shoulders patterns are for spotting tops (or bottoms if its an inverted H&S). However, I believe it is more often seen as a bearish continuation pattern.
Let's see if this will play out for Bitcoin (BTC/USD)
BTCUSD 1H Chart
- In this 1H chart, you actually see 2 head and shoulders.
- Now, you can argue they are not as "pretty" as the textbooks draw them, but the underlying reasoning is the same.
- This pattern essentially shows a bullish attempt that failed, and within a downtrend, this opens up further bearish outlook.
- So, as price now tests the $7900 neckline, I believe it will eventually break over the weekend and send price towards the $7000 area.
- The price action in the past couple of sessions has been in line with our bearish outlook for Bitcoin with $6000 in sight.