Ethereum

Why Bitcoin, Ethereum, and Dogecoin Could Skyrocket 30% on a Breakout of This Pattern

Why Bitcoin, Ethereum And Dogecoin Could Soar 30% On A Break Of This Pattern

Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO:ETH) were trading down around 3% on Monday afternoon, while Dogecoin (CRYPTO:DOGE) fell more than 4%.

All three cryptocurrencies have settled into a possible inverted head-shoulder pattern on their daily charts.

An inverted head and shoulders pattern can be either a strong reversal indicator, when found at the bottom of a downtrend, or a continuation pattern found in an uptrend. The pattern forms when a headline forms a rounded or V-shaped trough, then rises (right shoulder), followed by a second deeper dip and accompanied rise (head), then a third trough and a shallower climb than the second (left shoulder).

The reverse head-shoulder pattern has a neckline, which is drawn using a straight up, down, or horizontal trend line through the peaks of the pattern.

When the stock breaks through the neckline on above average volume, it indicates that the pattern has been recognized and a rally may follow.

  • Aggressive bull traders may choose to enter a security in a rising head and shoulders pattern after the third trough, with a stop below the lowest price in the trough. More conservative traders can wait to take a position on an upside break of the neckline.
  • Bearish traders can wait to enter the position if the security falls below the low price in the second trough, which undoes the bullish head and shoulders pattern and indicates that an accelerated downward move may follow.

See also: Bitcoin, Ethereum, Dogecoin slide as Russian-Ukrainian conflict takes root – why investors need to prepare for a rollercoaster week

The Bitcoin chart: Bitcoin may be printing the lower right shoulder of the reverse head-shoulder pattern that Benzinga called on March 1. Over the next few days, traders and investors can watch to see if Bitcoin rises towards the neckline of the pattern, which is currently trending towards the $45,100 level.

  • On Monday, Bitcoin appeared to be printing an inverted hammer candlestick, indicating that the bottom may be hit, and the crypto will trade higher on Tuesday.
  • If Bitcoin breaks below the $37,000 level, it will confirm that a new downtrend is beginning, which may concern bullish traders waiting to take a position.
  • The model’s measured movement is around 30%, which indicates that Bitcoin could climb towards the $58,000 mark. Meanwhile, a drop below around $34,300 will negate the reverse head and shoulders.
  • Bitcoin has resistance above $38,105 and $39,600 and support below at $35,593 and $32,200.

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The Ethereum chart: Like Bitcoin, Ethereum is trading in a possible reverse head-and-shoulder pattern that Benzinga also called March 1.

  • Ethereum was also looking to print an inverted hammer candlestick on Monday. The inverted hammer candlestick will need Tuesday’s candlestick to confirm that the pattern has been recognized.
  • The measured move from an upside breakout of Ethereum’s inverted head-and-shoulder pattern is around 34%, indicating that the crypto may hit the $4,100 level in the future. The pattern will be canceled if Ethereum falls below the $2,317 mark.
  • Ethereum has resistance above $2,609.02 and $2,890 and support below at $2,461.63 and $2,317.64.

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The Dogecoin chart: Benzinga hinted at a possible reverse head and shoulders pattern on March 3 and since then the crypto appears to be creating the right shoulder of the pattern.

  • Unlike Bitcoin and Ethereum, Dogecoin could also settle into a falling channel pattern on the daily chart. A descending channel is considered bearish until the crypto breaks across the upper descending trendline of the channel, which in this case aligns with the neckline of the reverse head and shoulders.
  • The measured move, if Dogecoin breaks out of the reverse head-and-shoulder pattern, is around 34%, indicating that the crypto could be trading above the 19 cent mark. The pattern will be canceled if Dogecoin falls below $0.106.
  • Dogecoin has resistance above 12 cents and $0.135 and support below at the psychologically important 10 cent zone.

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