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Home Cryptocurrency news

Head and Shoulders On Cryptocurrency Market Cap Foretells Retest of Lows

Tony Spilotro by Tony Spilotro
1 year ago
in Cryptocurrency news, Bitcoin
Reading Time: 3min read
total cryptocurrency crypto market cap head and shoulders
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The total cryptocurrency market cap can oftentimes provide clues as to where Bitcoin and altcoins could be headed in the short-term.

The latest price action is exhibiting a pattern that looks structurally similar to a head and shoulders, which if valid and confirmed would suggest Bitcoin and the rest of the crypto market will make another retest of lows.

Cryptocurrency Market Chart Forms Head and Shoulders Reversal

The coronavirus hasn’t just killed thousands, frozen humanity, and devastated the economy, it’s also sent financial markets into a tailspin, including the world of cryptocurrencies like Bitcoin, Ethereum, and the hundreds upon hundreds of altcoins that make up the market.

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Related Reading | Fool Me Twice: Will Bitcoin Rally on April Fools’ Day Once Again? 

As fears over the rapidly spreading pandemic peaked, markets suffered a catastrophic collapse. The Dow Jones Industrial Average saw the worst losses since 1987, and the total cryptocurrency market cap was set back by over $150 billion during the last month alone.

The fall in cryptocurrencies wiped out more than half of the total market’s overall value and market capitalization, but the asset class has since recovered over 50 billion in losses and is ranging above the recent lows.

However, if an ominous pattern on the total cryptocurrency market cap chart plays out, a retest of the lows is likely in the cards.

total crypto cryptocurrency market cap head and shoulders price chart

On the total crypto market cap, a potential head and shoulders pattern can be seen forming on 4H timeframes.

Chart Pattern Target Would Signal Retest of Lows Near $130 Billion

Head and shoulders are typically reversal patterns found at the top of a trend. This suggests that the recent recovery is over, and the target of the pattern would take the total cryptocurrency market cap back to retest lows around $130 billion.

The target of the structure would stop short of setting a new, lower low below $109 billion where the market fell to just weeks prior.

Related Reading | Crypto Market Reaches Longest Stretch of Extreme Fear In Over A Year

Chart patterns aren’t valid until confirmed in hindsight. However, declining volume as the pattern continues to form are signs that confirmation is probable.

According to the pattern, the price of cryptocurrencies should fall leading into today’s monthly close, forming the second half of the right shoulder and taking prices back down to neckline support.

If that support gives in, and the total cryptocurrency market falls below the neckline, the pattern is valid and the target comes into play.

However, if bulls manage to use the right shoulder to push the price of cryptocurrencies higher, it could lead to a short squeeze that propels the total crypto market cap back to highs not seen since February or January – long before the coronavirus spilled into the market and caused a catastrophic collapse.

Featured image from Shutterstock
Tags: chart patterncryptocryptocurrencyhead and shouldersreversaltotaltotal crypto market cap
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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