Many chartists and technicians have suggested the price action in Bitcoin over the last half of 2021 formed a massive Head & Shoulders top on the daily chart. The September 2021 high forming the left shoulder of the pattern, the November high the head, with the right shoulder formed by last year’s December 2021 and January 2022 price action.
This week the $40,500 neckline of this huge bearish reversal pattern was broken. If the downside price action plays out according to the textbooks Bitcoin’s price could revisit the low teens.
The typical Head & Shoulders formation suggests a downside target price projection that is measured by taking the height of the formation and subtracting it from the neckline. In Bitcoin’s case, the difference from the top of the head to the neckline is $27,500 which subtracted from the neckline number gives us a $13,250 target price. That is about a 75% drop from the neckline level.
Hopefully for the Bitcoin bulls, many chartists and technicians are wrong about this Head & Shoulders top.