Veteran Trader Brandt Identifies Bitcoin H&S Pattern, Dumping Incoming?

Sharing a Bitcoin (BTC) chart on the daily time frame, Peter Brandt warned that traders should not ignore a head and shoulders pattern when it is confirmed.

Peter Lewis Brandt, veteran trader and accomplished analyst, recently drew attention to a head and shoulders pattern forming on the Bitcoin (BTC) daily chart. Brandt warned investors not to ignore the confirmation, as the pattern indicates a looming trend reversal to the downside.

“A head and shoulders should be taken seriously if completed,” Brandt revealed in a recent tweet, when he shared a diagram showing the formation of the pattern.

A head and shoulders should be taken seriously if completed $BTC pic.twitter.com/n5ZiLasmUC

— Peter Brandt (@PeterLBrandt) 11 May 2023

The chart indicates that BTC formed the left shoulder when it broke out from the $20,000 price in February to between $26,000 and $28,000 in March. The asset formed the head in April amid its impressive run to a high of $31,000 on April 14. The right shoulder was formed when BTC recovered from the decline between April 19 and 24.

A head and shoulders pattern usually signals a potential trend reversal from bullish to bearish. It is formed by three peaks, with the middle peak (“the head”) being the highest and the other two peaks (“the shoulders”) being lower and roughly equal in height.

The pattern is identified by a neck connecting the lower shoulders. When the price breaks below the support found at the neck, it is considered a confirmation of the pattern, indicating that the previous uptrend has exhausted itself and a new downtrend is likely to occur.

An End to the BTC Uptrend?

Bitcoin’s uptrend began at the beginning of the year and peaked in mid-April. The asset has been throw off some of the gains picked up in the rally, but have retained a 65% gain this year. If the head and shoulders pattern is accurate, BTC could see an end to the rally.

However, it is important to note that not all head and shoulders patterns are created equal; additional confirmations are needed for informed trading decisions. This is because false breakouts and whiplash can occur. At the time of reporting, BTC is trading at $27,384, down 1% in the last 24 hours and 5.92% in the last week.