Could this be the top of the financial market forming while the majority of everyone doesn't realize it yet? To put it into perspective, 2020 was a sh*t show with markets melting and governments having to create a lie to "restart" the economy. It's self evident what happened if you had your eye on the Federal Reserve and Corporate events prior to 2020. Markets were become illiquid and CEO's were taking their golden parachutes. We're not stupid! Depending on which camp you're in markets are going to melt up while those in the other camp believe Armageddon is right around the corner. The truth? Only time will tell. However there are tools people use to "measure" a market's direction.
Markets going up or down can form what is called a megaphone pattern? By definition, "A megaphone pattern is a pattern that consists of a minimum of two higher highs and two lower lows. The pattern is generally formed when the market is highly volatile in nature and traders are not confident about the market direction. Normally this pattern is visible when the market is at its top or bottom." FN1
The chart below appears to be a Megaphone pattern that the DJIA has printed.
Dow Jones Industrial Average (Daily)
Dow Jones Industrial Average (Weekly)
Dow Jones Industrial Average (Monthly)
Schwab supports the pattern :
Megaphones
"Bullish: The rare Megaphone Bottom—a.k.a.
Broadening Pattern—can be recognized by its
successively higher highs and lower lows, which
form after a downward move. The bullish pattern
is confirmed when, usually on the third upswing,
prices break above the prior high but fail to fall
below this level again. Bearish counterpart:
Megaphone Top." FN2
What's going on with Bitcoin? It's been 133 days since the All Time High and price is down approximately 38%. With the DJIA possibly doing the Megaphone screaming meltdown is Bitcoin in a bullish or bearish position?
Bitcoin (Daily/BitStamp)
Is a bearish symmetrical triangle being formed? If so, it's a continuation pattern from the All Time High of $69,000 and it's formed
by two converging trend lines that are symmetrical in relation to the horizontal line. The Triangle should be completed on or about September 1, 2022. The symmetrical triangle takes longer to form normally than the bearish pennant.
Bitcoin (Daily/Coinbase)
Statistics of bearish symmetrical triangle
- In 57% of cases, exit from a bearish symmetrical triangle is bearish.
- In 91% of cases, the downward movement continues after exiting the triangle.
- In 57% of cases, the price manages to reach the triangle's price objective in the event of a downward exit.
- In 60% of cases, the price makes a pullback in resistance on the triangle’s support line.
- In 16% of cases, the price makes false breaks in the support/resistance lines (false exits from the bearish symmetrical triangle).
Notes on bearish symmetrical triangle
- A bearish symmetrical triangle’s exit most often occurs at about 80% of the pattern.
- Clean and forceful breaks/exits give better performance.
- Performance is best when the bearish symmetrical triangle is formed at the beginning of a bearish trend.
- Avoid opening a position if the break/exit occurs before 3/4 of the triangle.
- Resistance pullbacks on the triangle’s support line are detrimental to performance.
For your information: A bearish symmetrical triangle is a continuation chart pattern. Its opposite is a bullish symmetrical triangle.
Bitcoin (Monthly/Coinbase)
Looking at BTC from a longer perspective it's trading sideways between 47,990 and 32,933.33 on the monthly.
