All eyes are on Bitcoin and more specifically whether the cryptocurrency is able to stay above the downtrend line “meme” as well as the critical $ 10,000 level.
The asset has held up so far, confirming both previous resistance levels and support. But at the same time, the leading cryptocurrency by market cap may have also confirmed the largest reversal pattern in its entire history.
Has the cryptocurrency just confirmed its biggest reversal chart ever?
When Bitcoin slammed towards $ 20,000 and immediately fell from $ 8,000 to $ 12,000 days later, it was clear that a turnaround was underway. The blow-off stop has yet to be retested and marks the most significant confirmed reversal left in Bitcoin’s price charts so far with a full 40% move in the top-to-bottom pattern.
Nearly a full year later, Bitcoin then collapsed to its current bear market bottom at $ 3,200, consolidating for months, forming another reversal pattern. The rising triangle at the asset’s four-year low had a full high of just 30%, but caused the cryptocurrency to rise more than 300% from the trough of the pattern.
Related reading | Has Bitcoin Confirmed a Bullish Retest of the Downtrend Line “Meme”?
While these two reversal patterns are the two most significant during the current bear and bull market cycle, they pale in size when compared to the potential reverse head and shoulders pattern that forms over weekly time frames in BTCUSD price charts.
BTCUSD Weekly Inverse Head and Shoulders Confirmed Throwback | Source: TradingView
Inverse Head and Shoulders may be targeting new all-time high in Bitcoin
Bitcoin price action since the top of 2019 has shaped what appears to be a massive inverted head and shoulders pattern. These structures are typically bullish reversal patterns, which represent a tug of war between buyers and sellers, with sellers ultimately losing heavily.
The significance of the reversal pattern isn’t just the fact that it can skyrocket Bitcoin from here, it’s the sheer size of the formation itself.
Related reading | This accumulation pattern suggests that bulls are on the right side of Bitcoin
Past reversal patterns occurred within only 30-40% of the price action, while the full rise of the candle near the “head” of the pattern is more than 95%. Matching that move, from the breakout point, would bring the cryptocurrency back to test its former all-time high as a target.
Head and shoulder patterns, whether reversed or right side up, often result in a return to retest the trendline as support for reversed resistance or vice versa. After that new test is confirmed, the next stop is the target based on the structure.
Pattern targets are taken from the trendline to the bottom of the head. Adding a spunk caused by Black Thursday would push the purpose of the structure past the cryptocurrency’s record price.
Could this huge pattern be the last reversal pattern before Bitcoin hits above its highest point?
Featured image from DepositPhotos, Charts from TradingView