"Jack's Trading Classroom: Long and short layout of BTCUSD head and shoulders pattern"

Original trading classroom by Jack, "Long and Short Layout of BTCUSD Head and Shoulders Pattern"

Yesterday in the BTCUSD daily chart, we shared the possible formation of a bottom pattern - a cup and handle pattern. Today, we switch to a smaller time frame to look for other entry opportunities.

Currently, we see the four-hour candlestick chart of BTCUSD. Today, we are not using any indicators or tools but simply judging the layout based on basic patterns. Now we can see that BTCUSD is forming a potential head and shoulders pattern in the four-hour candlestick chart.

Why do we say it is a head and shoulders pattern?

In the chart, we can see that BTCUSD currently has some elements of a head and shoulders pattern: left shoulder, right shoulder, and head. The neckline pullback before forming the right shoulder is not perfect, with the lowest shadow dropping to a low of 9456.5. Looking back at the chart, the high point formed on February 3, 2020, at 9631.5 was not broken to the downside. Therefore, we can determine that 9631.5 is the current structural support level in the four-hour candlestick chart. With the formation of the left shoulder, right shoulder, and head, we consider the structural support level as the neckline range for trading. If the BTCUSD price continues to decline on the four-hour chart and fails to rise above the head, we can consider entering a short position after the price drops below and closes below the neckline level of 9631.5. The stop-loss is recommended to be set at the high point of the right shoulder, and the profit target can be set at the lower support levels.

Resistance levels:

R1 10258.0

Support levels:

S1 9793.5
S2 9419.0
S3 8919.0
S4 8651.0

In recent days, the cryptocurrency market has seen large fluctuations. It is recommended that traders strictly follow risk management measures and avoid high leverage and high contract volume operations to prevent additional losses caused by volatile market conditions. This article is personal commentary, please read with caution, as cryptocurrency trading may involve risks to your capital.

WeChat Public Account: Jack's Trading Classroom
Personal Website: jackbtc.io

Related Readings

• "Jack's Trading Classroom" BTCUSD Classic Bottom Pattern - Cup and Handle Pattern
• "Jack's Trading Classroom" Short Commentary on BTCUSD Price Falling Below Ten Thousand Points

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