Content
1. Nature
2. Identification
3. Occurrence
4. Historical performance
5. Finding entries
6. High probability trades
7. stop losses
8. Miscellaneous
9. Conclusion
Master class on HEAD & SHOULDERS pattern for trading Bitcoin.
A thread.
Comprehensive guide to head and shoulders pattern. Made exhaustive enough for Trading purposes.
t’s a frequently occurring, misunderstood and arguably the most useful pattern.
RT would be appreciated.
Content
1. Nature
2. Identification
3. Occurrence
4. Historical performance
5. Finding entries
6. High probability trades
7. stop losses
8. Miscellaneous
9. Conclusion
The head and shoulders top is a reversal, bearish pattern, signifying a prospective drop in future prices.
The formation of pattern with a breakdown from its neckline(base) starts a probable bearish move.
A prospective H&S pattern should have 3 distinct peaks. The middle peak is the head. This is the highest point of this pattern, sitting in between 2 shorter peaks, i.e. the shoulders. There must be an overlap in prices of these 3 distinct peaks.
The consensus is that the left shoulder should have the highest volume, the head lesser and the right shoulder the least. This isn't a rule but a general observation. It could change often.
A high-volume breakdown might not see a retest immediately.
The pattern generally occurs after a substantial rise in price, i.e. it occurs when a price has significantly risen and is looking for a reversal.
John Murphy was of the opinion that the neckline is likely to be an upward trending.
Here is an example of downward sloping H&S.
H/S is probably the best performing pattern, in both bull and bear markets.
Although the success rate of meeting the target calculated by range of the depth is only a little more than 50%, the rise is good enough to make ample profit.
Here we see a target being met and the price falling further before a throwback.
Throw-back means the return of price to the neckline levels.
The entry should be taken ONLY when the pattern is completed, not in an anticipation of a completion. Example of an anticipated pattern failure.
Wait for the pattern to completely form. Wait for the breach of the neckline.
Enter only if the above 2 events occur.
The head and shoulders pattern could fail at times. Here is an example of a failed pattern.
The failure generally occurs when the volume showcases an anomaly, or the market structure is looking only for a consolidation and not retracement.
1. Waiting for a retest
2. High Volume break-out
3. High momentum Break-out
Discussed below.
It is common for the Breakdown from the Head and shoulders pattern to go back up and test the neckline.
An establishment of resistance at the neckline is a high probability entry for shorting.
In this case, if the Breakdown is accompanied by high momentum or high volume, a safe entry is available.
Here is an example of High-volume break-down without a re-test,that was a safe entry.
If the Break-down is such, along with breaking the neckline, a previous support is also broken, then a short entry can be taken without a re-test after the support is broken.
A common practice is to target the same number of points as is the range of the head.
Many people have different opinion on measuring the range.
I follow a Conservative method to measure from the neckline to the lowest point of the topmost candle.
A method used by Peter Brandt is placing the stop loss above the high of the candle just before the Breakout.
In my opinion this works well, however I'd place it a bit higher considering the volatility of Bitcoin.
Illustration below
Complete Market structure of H&S
Price is in an uptrend.
Price looks for a reversal forming head and shoulders.
Neck line breaks down, followed back a retest of the Neckline. Price declines again at a range equal to the range of the head.....
Followed by a retest of the Neckline and continuation to the upside.
Sometimes the market structure see a H&S inside a H&S. The price movement for this structure is exactly the same.
More from Emperor👑
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"Blockchain technology is energy-intensive..." => No, it doesn't have to be.
Let's look at Proof-Of-Stake, an alternative to the energy-intensive Proof-Of-Work algorithm.
🧵🔽
1️⃣ A Quick Recap On Proof-Of-Work
A Proof-Of-Work algorithm requires miners to do a certain amount of work that is compute-intensive to gain access to a service or the right to do something. This algorithm, by design, also requires that the work done shall not ...
... be reusable for anything else than what it was performed for. This lies at the core of the security concept of a blockchain. To gain the right to append a new block to a chain and to get some currency as a reward, there is work to be done, and this work must be verifyable.
That work is a race between different miners. Many miners try to compete and to be the first to find the answer to a problem presented to them. This implies that a lot of energy is wasted as only the first correct solution is accepted.
You can find a more detailed thread on Proof-Of-Work
Let's look at Proof-Of-Stake, an alternative to the energy-intensive Proof-Of-Work algorithm.
🧵🔽
1️⃣ A Quick Recap On Proof-Of-Work
A Proof-Of-Work algorithm requires miners to do a certain amount of work that is compute-intensive to gain access to a service or the right to do something. This algorithm, by design, also requires that the work done shall not ...
... be reusable for anything else than what it was performed for. This lies at the core of the security concept of a blockchain. To gain the right to append a new block to a chain and to get some currency as a reward, there is work to be done, and this work must be verifyable.
That work is a race between different miners. Many miners try to compete and to be the first to find the answer to a problem presented to them. This implies that a lot of energy is wasted as only the first correct solution is accepted.
You can find a more detailed thread on Proof-Of-Work
Proof-Of-Work is the name of a cryptographic algorithm that is used for some blockchains when new blocks are to be appended to the chain.
— Oliver Jumpertz (@oliverjumpertz) April 3, 2021
Let's take a higher-level look at how this one works, shall we?
\U0001f9f5\U0001f53d
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Contact with ancient India brought the influence of Hinduism and Buddhism to SEA. What we now call Hinduism similarly developed in India out of native animism and the more formal Vedic tradition. This can be seen in the multitude of sacred animals and location-specific Hindu gods
i wonder if you can make a thread bout witchcraft in malaysia.. or list of our own local gods/deites..
— r a y a \U0001f319 (@lcvelylilith) February 20, 2020
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— \u2745\u1710\u170b\u1713\u170e (@uglyluhan) June 16, 2019
Two known examples of such elemental spirits that had god-like status are Raja Angin (king of the wind) and Mambang Tali Arus (spirit of river currents). There were undoubtedly many more which have been lost to time
Contact with ancient India brought the influence of Hinduism and Buddhism to SEA. What we now call Hinduism similarly developed in India out of native animism and the more formal Vedic tradition. This can be seen in the multitude of sacred animals and location-specific Hindu gods
Recently, the @CNIL issued a decision regarding the GDPR compliance of an unknown French adtech company named "Vectaury". It may seem like small fry, but the decision has potential wide-ranging impacts for Google, the IAB framework, and today's adtech. It's thread time! 👇
It's all in French, but if you're up for it you can read:
• Their blog post (lacks the most interesting details): https://t.co/PHkDcOT1hy
• Their high-level legal decision: https://t.co/hwpiEvjodt
• The full notification: https://t.co/QQB7rfynha
I've read it so you needn't!
Vectaury was collecting geolocation data in order to create profiles (eg. people who often go to this or that type of shop) so as to power ad targeting. They operate through embedded SDKs and ad bidding, making them invisible to users.
The @CNIL notes that profiling based off of geolocation presents particular risks since it reveals people's movements and habits. As risky, the processing requires consent — this will be the heart of their assessment.
Interesting point: they justify the decision in part because of how many people COULD be targeted in this way (rather than how many have — though they note that too). Because it's on a phone, and many have phones, it is considered large-scale processing no matter what.
It's all in French, but if you're up for it you can read:
• Their blog post (lacks the most interesting details): https://t.co/PHkDcOT1hy
• Their high-level legal decision: https://t.co/hwpiEvjodt
• The full notification: https://t.co/QQB7rfynha
I've read it so you needn't!
Vectaury was collecting geolocation data in order to create profiles (eg. people who often go to this or that type of shop) so as to power ad targeting. They operate through embedded SDKs and ad bidding, making them invisible to users.
The @CNIL notes that profiling based off of geolocation presents particular risks since it reveals people's movements and habits. As risky, the processing requires consent — this will be the heart of their assessment.
Interesting point: they justify the decision in part because of how many people COULD be targeted in this way (rather than how many have — though they note that too). Because it's on a phone, and many have phones, it is considered large-scale processing no matter what.
