Bitcoin approaches $25,000, how can we identify a potential top?
アップデート済
First of all - let me clearly state that this is solely a EDUCATIONAL IDEA & not a short recommendation - Shorting parabolic bull markets is not recommended especially for beginners and this idea is solely to give you a understanding of what A POTENTIAL blow off top can look like. If you want to show your appreciation for the insight - then i would greatly appreciate if you give the idea a like & comment thank you!
Today marks a historic day in the Cryptocurrency Markets, with Bitcoin entering a new price discovery phase breaking its $20,000 all time high. So if you have been holding your Bitcoin since the last crazy bull run congratulations!
But where should you consider selling? How can you have a idea when the market is going to turn against you and head downwards? In my personal style of trading i often use chart patterns to find potential areas the market can reverse or change momentum. One of the patterns I use often is referred to as the BARR TOP.
The Bump And Run Reversal Top (BARR Top) is not a well known pattern and can be hard to identify. Price has a strong uptrend off in two phases - the bump & the run, first a small increase then recovery occurs, then price increases with massive volume at a very sharp angle. Price then makes a sharp peak and comes down breaking the support line (A); the angle of this support line is usually around a 35-50 degrees. It often throws back and bearish retests off that previous support (this is the entry point, B), its common for this rejection to be at the 0.618 Fibonacci level.
Back in 2017, Bitcoin ran to $20,000 then put in a Blowoff Top, but one thing not known by many also is that the 2017 Bitcoin run ended in a BARR TOP pattern! Lets have a look at Bitcoin in 2017 and how we could of traded this Bump & Run Top Pattern:
As you can see the BARR TOP was a excellent sign that the Bull Run was over and Bitcoin did eventually make it to the target area. So let me give you some insight about what exactly this pattern is, how we can identify it, and what key areas the pattern can give us:
IDENTIFYING THE BUMP & RUN TOP
• Look for extreme upwards movement followed by sharp retrace (”run”)
• Usually at a steep angle with huge volume
• Almost exact in appearance of the left image
• The “bump” (first phase) is usually rounded in appearance or "choppy"
Log scale is to be used when identifying the pattern. The possible price targets are the important Demand Areas at the start of the pattern, if you dont know what a Demand Area is, then click on the below image for a explainer:
KEY POINTS
• Good success rate
• Strong breakouts
• Pattern not considered valid until breakout and confirmation occurs
• Not as common as its mirror - the BARR Bottom (Bump & Run Bottom)
• Look for 0.618 rejection to increase success
So the idea is to wait for the BARR Top to be formed, if you are already in a short position then you can watch how price reacts to the diagonal trendline (A), marked on the chart at (C), we can see that once the price has multiple confirmations then the possibility of the Bump & Run Top actually failing comes into the picture.
Whereas if the price breaks underneath (A) and then confirms the downtrend at (B), it can signify the potential of a strong downtrend continuation.
If the downtrend breakout occurs, we can draw a measurement area from the two Swing Low (LH) points at the beginning of the BARR TOP or we can use Supply & Demand Areas to identify potential take profit or support areas. Click on the below image to understand how i use Order Zones to find these important areas:
Below i have linked 3 more ideas on BARR TOPS & BARR BOTTOMS for further education, thank you!
Today marks a historic day in the Cryptocurrency Markets, with Bitcoin entering a new price discovery phase breaking its $20,000 all time high. So if you have been holding your Bitcoin since the last crazy bull run congratulations!
But where should you consider selling? How can you have a idea when the market is going to turn against you and head downwards? In my personal style of trading i often use chart patterns to find potential areas the market can reverse or change momentum. One of the patterns I use often is referred to as the BARR TOP.
The Bump And Run Reversal Top (BARR Top) is not a well known pattern and can be hard to identify. Price has a strong uptrend off in two phases - the bump & the run, first a small increase then recovery occurs, then price increases with massive volume at a very sharp angle. Price then makes a sharp peak and comes down breaking the support line (A); the angle of this support line is usually around a 35-50 degrees. It often throws back and bearish retests off that previous support (this is the entry point, B), its common for this rejection to be at the 0.618 Fibonacci level.
Back in 2017, Bitcoin ran to $20,000 then put in a Blowoff Top, but one thing not known by many also is that the 2017 Bitcoin run ended in a BARR TOP pattern! Lets have a look at Bitcoin in 2017 and how we could of traded this Bump & Run Top Pattern:
As you can see the BARR TOP was a excellent sign that the Bull Run was over and Bitcoin did eventually make it to the target area. So let me give you some insight about what exactly this pattern is, how we can identify it, and what key areas the pattern can give us:
IDENTIFYING THE BUMP & RUN TOP
• Look for extreme upwards movement followed by sharp retrace (”run”)
• Usually at a steep angle with huge volume
• Almost exact in appearance of the left image
• The “bump” (first phase) is usually rounded in appearance or "choppy"
Log scale is to be used when identifying the pattern. The possible price targets are the important Demand Areas at the start of the pattern, if you dont know what a Demand Area is, then click on the below image for a explainer:
KEY POINTS
• Good success rate
• Strong breakouts
• Pattern not considered valid until breakout and confirmation occurs
• Not as common as its mirror - the BARR Bottom (Bump & Run Bottom)
• Look for 0.618 rejection to increase success
So the idea is to wait for the BARR Top to be formed, if you are already in a short position then you can watch how price reacts to the diagonal trendline (A), marked on the chart at (C), we can see that once the price has multiple confirmations then the possibility of the Bump & Run Top actually failing comes into the picture.
Whereas if the price breaks underneath (A) and then confirms the downtrend at (B), it can signify the potential of a strong downtrend continuation.
If the downtrend breakout occurs, we can draw a measurement area from the two Swing Low (LH) points at the beginning of the BARR TOP or we can use Supply & Demand Areas to identify potential take profit or support areas. Click on the below image to understand how i use Order Zones to find these important areas:
Below i have linked 3 more ideas on BARR TOPS & BARR BOTTOMS for further education, thank you!
ノート
For education wanted to show a earlier example that played out hitting both targets with a 1300$ sell off on Bitcoin ノート
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