H&S as an indicator vs. predictor. Zoom in for more details. Outlined some possible H&S psychological patterns. I hear this term a lot and I see it appear often on all timeframes.
In my opinion, it is hard to advise acting on this psychological pattern as the pattern forms. Hoping for the completion of a H&S pattern or basing a short/long during the formation of the possible pattern can be reckless; however, acing in hindsight on the formed or rejected patterns can serve as a powerful indicator of strength.
There are 3 H&S patterns I outline in yellow and one large H&S pattern in white. Two of the yellow H&S patterns (if the current one completes) with heads at 4475 can be utilized as local top indicators of strong resistance.
The larger scale yellow H&S pattern with the neckline at 3550 was not fully formed; however I saw many people short due to the potential pattern. Instead, waiting for confirmation of the pattern would have been a better move and acting on the pattern with hindsight would have been less risky with great rewards. With a rejection of the pattern, we saw clear bull strength taking the market to reversal territory. Had the pattern completed, excellent low risk entry positions at ~3300-3400 (or 2980-3000 if it had fully completed).
The largest (white) H&S pattern is somewhat of a joke and basing the all time top of BTC at the head of the pattern is reckless. Basing shorts/longs on the large scale pattern (although it has been mentioned) is nothing more than gambling.
These are my opinions on H&S and they can be drawn in many ways, but still serve as excellent indicators in hindsight.
Would appreciate thoughts/opinions on the use of H&S as predictors vs indicators.
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LOL at anyone who actually used the large scale H&S to set longs and shorts. As I said above, the white H&S was only a joke and due to its scale a ridiculous pattern of which to base decisions.
@cerncris Agree with you about waiting until it fully forms and if it is rejected or accepted. For example right now. Given that it is in a larger upward trend it could very well just allow for some consolidating before making another run. It should not be traded on until it is clear that prices are dropping. If things do drop below an HnS they will more than likely drop enough to have waited a bit to be sure it's not setting up for another run up. Especially in this market. There have been a lot of bear traps since the 2980 low. I got caught thinking it would retest 3000 or so and lost a bit. Also the overall upward trend that this in with the 4 hour golden cross is a strong sign of strength.
I can't help but wonder if what's happening is that weaker hands are trying to be shaken out so that they can be gobbled up before another run up.
Also, Wreck em Tech!!! ;)
cerncris
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@KevinWatson, Ahaha, agreed. BTC loves to shake out nonbelievers. Gig em my bro!