Will this Binance Coin price setup trigger a 20% crash?
|- Binance Coin price is forming a head-and-shoulders pattern.
- If it completes, this technical formation forecasts an 18% crash to $225.26.
- A daily candlestick close above $307.5 will create a higher high and invalidate the bearish thesis.
Binance Coin price has been on a retracement move since a local top in early August. During its descent, BNB seems to have formed a bearish head-and-shoulders reversal pattern. While confirmation is yet to arrive, speculators can realize good gains if they get in early, but the risks are also high.
Binance Coin price in a new phase
Binance Coin price action seems to be in the process of forming a head-and-shoulders pattern, which started back on July 23. This technical setup contains three swing highs, with the central peak the tallest (the head), and the two on either side (the shoulders) of a similar height, thus the name 'head-and-shoulders'.
Currently, Binance Coin price is forming the right shoulder. Eager investors should wait for BNB to finish forming the lower low of the right shoulder (on the four-hour time frame) for pattern confirmation.
The establishement of a lower low relative to the August 24 swing low at $294.20 would confirm the start of a downtrend. In such a case, investors can expect Binance Coin price to revisit the $275 support floor, or 'neckline'. A retest of this level will confirm the completion of the head-and-shoulders pattern.
The pattern forecasts an 18% downswing to $225.26, obtained by measuring the height of the central peak and adding it to the neckline drawn at the pattern's base where the intermediate swing lows coincide. A breakdown of the the neckline at $275 will provide the final confirmation of the start of an 18% sell-off.
In such a case, market participants can expect BNB to crash to $225.26, although the $243.14 barrier could pose some threat to bears’ plans by prematurely halting the down leg.
BNB/USDT 1-day chart
On the other hand, a higher high above $307.50 will invalidate the bearish thesis and the head and shoulders pattern. This development could see Binance Coin price attempt a rally to $336.00.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.