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The Head & Shoulders Pattern (H&S) is a pattern described on Investopedia as a “specific chart formation that predicts a bullish-to-bearish trend reversal” and that it “is believed to be one of the most reliable trend reversal patterns”. Note the word “believed” in the latter sentence; technical analysis is not empirically proven. Nevertheless, the H&S pattern is one of the most commonly mentioned indicators on /r/BitcoinMarkets, and is commonly used by many technical bitcoin traders. As such, it stands to reason that the formation of such a pattern may be a self-fulfilling prophecy in the sense that it can cause a psychological trick which causes traders to cause the price movement they were predicting, and may be the trigger that bursts a bubble that for other reasons was already bursting.
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As we can see in the graph above, a H&S pattern has formed for bitcoin. Whether or not this really is a meaningful indicator to trade by is not yet proven, but for me, this is an as good an exit point as any. I entered a sizeable short position at the price of $16,236.40 on Bitmex, a few hours after the pattern was formed on the graph above. The market during this weekend will probably be exceptionally shaky, so it’s best to try to not to look too much at the price in order to avoid getting scared out of one’s position. Set your stop losses, and may the gods be ever in your favor.

Do you think shorting bitcoin? Let us know in the comments section below.

Disclaimer: Bitcoin price articles and markets updates are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”