Head and Shoulders Patterns

Head and Shoulders Pattern on BTCUSD

Head and Shoulders Pattern on BTCUSD

Head and Shoulders Pattern on BTCUSD is a classical chart pattern. It is located in an important technical zone and it is one of the most telling patterns at this time.

The premise

The head and shoulders pattern on BTCUSD (bitcoin), is a confirmation of my previous article about the fact that something huge is about to happen in crypto market. You’ll find more about it in this article: Head and Shoulders Pattern on XRPUSD. I highly recommend you to read this article as this is something that happen very rare in the market. But, when it happen, it is very important to be on the right side of the market. Therefore, if we take a look at the daily chart of the bitcoin, we’ll see that we have a nice and clear head and shoulders pattern at the end of a pullback. I think it’s not a secret anymore that the BTCUSD is in a primary downtrend.

Head and shoulders pattern on BTCUSD daily chart

How did I trade the head and shoulders pattern on BTCUSD

Being a classical chart pattern, I simply placed my sell stop order slightly below the neckline. That means under the March 1st 2020. Consequently, my order is open, few days later on March 8th.

The outcome

Right after the March 8th which is the breakout day, the price dropped in the next two days until the 7600,00 area and then stalled for another two days. On March 12th, the price continued to drop in very violent manner and it would’ve been hit my take profit. Why I say it would’ve been hit? Because, as I usually do, I managed to collect my profits way early then I should. So, this means that I closed the trade at the 7040,00 area which was a very superficial support zone. I was short from 8200,00 and my take profit was in the 6300,00 zone. Consequently, the main problem here is that I collected my profits with 10 minutes earlier before my take profit would’ve been hit. That’s truly painful. Take a look for yourself.

The outcome of the head and shoulders pattern on BTCUSD daily chart

The conclusion

The same old conclusion also applies here. And it is that I need to stop collecting the profits earlier and let my trades run. This was a 1:4.5 risk reward trade and I only managed to get 1:2.5. Therefore, this means that I risked 0.8% and I got only 2.5% instead of 3.6% and this is not good at all.

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