Long Term Update: Head and Shoulders

UploadImageThe head and shoulder pattern is one of the most common reversal formation, while it is preferable that the left and right shoulders be symmetrical, it is not an absolute requirement, in fact the slope of the neckline (pointed out in the attached left chart, click to enlarge it)  will affect the pattern’s degree of bearishness; a downward slope is more bearish than an upward slope, in this particular case the slope is telling us that it’s not much bearish and indeed the market bottomed out at 79$ near the level that i indicated as a potential support in one of my previous update and exactly at the long term VWAP (computed using last 3 months of data) without a severe crash under 50$.
This pattern helped me in the decision to close my long term trade 5 days ago at 128$.

Looking the big picture i think that this market it’s still bullish in the long term as long as it stays above 80$, another bullish indication is that the recent bottom has been higher then the double bottom made in April, now BTC/USD is approaching the first deviation line at about 130$ and it’s crucial to go above it with a good volume breakout. A failure to conquer the 130$ level would be a first warning of a downside move, probably headed below the recent 79$ bottom.

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