As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its completion marks a change in trend. The pattern contains three successive low levels with the middle (head) being the lowest and the two outside (shoulders) forming at a higher level than the head. Ideally, the two shoulders would be equal in height and width. The reaction highs in the middle of the pattern can be connected to form resistance, or a neckline.
Possible chart pattern price target is determined by measuring the distance between the bottom of the HEAD and the pattern’s breakout level (neckline), and extending that distance upward from the breakout. After breakouts there is a possibility of a pull back towards the broken support/resistance levels. This is called a “re-test” or a “pull-back”. A successful re-test or pull back should hold at or above the pattern boundary. Failure to do so would put the bullish interpretation in question.
Since the beginning of April 2018, XRP/BTC has been forming a possible multi-month long H&S bottom. Completion of the 8 month-long H&S bottom reversal chart pattern can result in a doubling of the XRP/BTC ratio. XRP performed much better than its peers over the past quarter. If the bottom reversal chart pattern succeeds we can see further outperformance by Ripple in the crypto currency space. XRP/BTC ratio can test June 2017 – January 2018 high levels.
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