#BinanceMegaDropSolve
The Bitcoin 'head and shoulders' pattern points to a liquidation down to $75,000: Godbole. The recent drop in BTC price could be setting the stage for a significant bearish reversal pattern.
What to know:
BTC's recent drop may be setting the stage for a bearish head and shoulders reversal pattern.
The completion of a pattern would indicate an extended drop towards $75,000.
However, technical analysis of the charts does not always tell the complete story, so caution is advised.
After rising more than 50% since early November, Bitcoin (BTC), the leading cryptocurrency by market value, appears to be forming a pattern. If completed, this could bring prices back around $70,000.
BTC's price action since late November has evolved into what technical analysts call a 'head and shoulders' (H&S) pattern, which signals a trend reversal from bullish to bearish. The first failed attempt to scale the $100,000 mark in November marked the first shoulder.
Next came the head drop, marking a rapid pullback to $92,000 from the all-time high of over $108,000 in the second half of December. Meanwhile, the 5% drop to nearly $97,000 hints at the formation of a right shoulder.
If the massive sell-off persists and prices fall below the neckline (the horizontal trend line connecting the valleys of the two shoulders), the bearish head and shoulders reversal pattern would be confirmed. At the time of writing, the so-called neckline support was seen around $91,500.
A break below this level could pave the way for a drop to approximately $75,000, a figure determined using the measured move method. This method measures the vertical distance from the highest point of the head to the neckline and then subtracts the same from the price point of the neckline to arrive at a potential drop target.
In technical analysis, traders examine charts for price patterns to predict future movements. However, it is necessary to act cautiously when trading such patterns, as they can fail and leave traders on the wrong side of the market.
