Veteran commodity trader Peter Brandt claimed in a recent tweet that the menacing head-and-shoulder pattern forming on Bitcoin’s four-hour chart may fail. So what is this head-shoulder model? Here are the details.
Head and shoulders tops need not always produce a bear market to the implied target or beyond. This pattern can also fail (bullish) or morph into a larger congestion (exhausting). $BTCUSD pic.twitter.com/8f0E0HqXn2
— Peter Brandt (@PeterLBrandt) October 27, 2021
Investors have pushed Bitcoin to all-time highs this month, with the excitement of the first Bitcoin-linked exchange-traded funds launched by ProShares last week. Earlier today, Bitcoin slid to $58,000, its lowest level since Oct. The sudden drop sparked another bear market fear.
The leading cryptocurrency fell 13.3% from its all-time high of $67,000 reached on October 20.
The foreboding head-and-shoulder pattern emerged after buyers failed to gain ground above the $63,000 resistance and hold the latest high. For those who don’t know, this pattern is a technical analysis that signals the end of the uptrend. It is necessary to observe the formation of an uptrend before the formation of the pattern (as in BTC). After this formation, the price is expected to move downwards. But Peter Brandt made the following assessment from a different perspective:
“Head and shoulder tops don’t always need to create a bear market to or beyond the implied target. This pattern can also fail (bullish) or turn into a bigger bottleneck (tiring).”
As it turns out, if the current run gets tiring, Brandt expects a larger congestion pattern to occur.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.