Why Bitcoin, Ethereum And Dogecoin Could Soar 30% On A Break Of This Pattern

Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) were trading about 3% lower on Monday afternoon, while Dogecoin (CRYPTO: DOGE) was falling over 4%.

All three cryptocurrencies have settled into a possible inverted head-and-shoulder pattern on their daily charts.

An inverted head-and-shoulder pattern can be either a powerful reversal indicator, when found at the bottom of a downtrend, or a continuation pattern found in an uptrend. The pattern is formed when a security forms a rounded or V-shaped trough and then rises (right shoulder), followed by a second deeper downturn and accompanied rise (head) and then a third trough and rise that is shallower than the second (left shoulder).

The inverted head-and-shoulder pattern has a neckline, which is drawn using a straight ascending, descending or horizontal trendline across the peaks in the pattern.

When the security breaks up through the neckline on higher-than-average volume, it indicates the pattern was recognized and a rally may follow.

Aggressive bullish traders may choose to enter a security in a head-and-shoulders pattern on the rise following the third trough, with a stop below the lowest price in the trough. More conservative traders may wait to enter a position on an upward break from the neckline.
Bearish traders may wait to enter into a position if the security falls below the lowest price within the second trough, which negates the bullish head-and-shoulders pattern and indicates an accelerated move to the downside may follow.

The Bitcoin Chart: Bitcoin may be in the process of printing the bottom of the right shoulder of the inverted head-and-shoulder pattern that Benzinga called out on March 1. Over the coming days, traders and investors can watch to see if Bitcoin rises up toward the neckline of the pattern, which is currently trending at about the $45,100 level.

On Monday, Bitcoin looked to be printing an inverted hammer candlestick, which indicates the low may be in, and the crypto will trade higher on Tuesday.
If Bitcoin falls below the $37,000 level, it will confirm a new downtrend is beginning, which may concern bullish traders waiting to enter into a position.
The measured move of the pattern is about 30%, which indicates Bitcoin could soar up toward the $58,000 mark. Meanwhile, a drop below about $34,300 will negate the inverted head-and-shoulders.
Bitcoin has resistance above at $38,105 and $39,600 and support below at $35,593 and $32,200.

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The Ethereum Chart: Like Bitcoin, Ethereum is trading in a possible inverted head-and-shoulder pattern that Benzinga also called out on March 1.

Ethereum was also looking to print an inverted hammer candlestick on Monday. The inverted hammer candlestick will need Tuesday’s candlestick for confirmation that the pattern was recognized.
The measured move of a bullish break of Ethereum’s inverted head-and-shoulder pattern is about 34%, which indicates the crypto could rise up toward the $4,100 level in the future. The pattern will be negated if Ethereum falls below the $2,317 mark.
Ethereum has resistance above at $2,609.02 and $2,890 and support below at $2,461.63 and $2,317.64.

The Dogecoin Chart: Benzinga called out a possible inverted head-and-shoulders pattern on March 3 and since that date, the crypto looks to be creating the right shoulder of the pattern.

Unlike Bitcoin and Ethereum, Dogecoin could also be settling into a falling channel pattern on the daily chart. A falling channel is considered bearish until the crypto breaks up over the upper descending trendline of the channel, which in this case aligns with the neckline of the inverted head-and-shoulders.
The measured move, if Dogecoin breaks up from the inverted head-and-shoulder pattern, is about 34%, which indicates the crypt could trade up over the 19-cent mark. The pattern will be negated if Dogecoin falls below $0.106.
Dogecoin has resistance above at 12 cents and $0.135 and support below at the psychologically important 10-cent area.

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