Trade Recommendation – Zcash/Bitcoin
Inverse head and shoulders pattern is a reversal pattern, usually formed at the lows. The breakout of this can result in the start of a new uptrend, which can offer an opportunity to get into the trade early. We believe that ZECBTC is one such pair, which is ready to launch into a new uptrend, hence, we want to own it.
- Inverse head and shoulders is a bottoming formation.
- ZECBTC has formed an inverse head and shoulders pattern.
- Buy on a breakout and close above the neckline around 0.06 with a SL of 0.035 and a target objective of 0.087
A setup that forms on a long-term chart is considered as more reliable. We find that the ZECBTC pair has formed an inverse head and shoulders pattern over a period of 18-weeks. Additionally, over a longer time frame, we find a possibility of a double bottom at 0.01651678. As the formation is at the lows, it assumes greater significance and the chances of a reversal increase.
Let’s look at the daily charts to locate the entry and exit levels.
The inverse head and shoulders pattern completes on a breakout and close above the neckline. Therefore, we shall buy around the 0.06 levels, once the pair is clear of the neckline. The minimum target objective of this trade is 0.087.
We don’t want to hang on to the trade if it falls below the right shoulder. Therefore, a stop loss of 0.035 can be kept. Traders with a lower risk appetite can keep a SL of 0.043.
Once the pair enters into an uptrend, it can easily exceed its target objective. Hence, traders can book 50% profits at the minimum target objective and trail the rest with a suitable stop loss.
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