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Bitcoin Forming a Head and Shoulders Pattern

Bitcoin (BTCUSD) was in multiple breakouts in the 1H chart heading into the April 6th session, but was still bearish in the 4H chart. Let's follow up with technical development as we start the April 7th session.

Bitcoin (BTCUSD) 1H Chart April 7

(click to enlarge)

As we begin the April 7 session, we can see that bitcoin failed to extend above 262. Here are some observations, bullish vs. bearish.
1) Price is still holding above the 200-, 100-, and 50-hour simple moving averages (SMAs) although it violated the 50-, and 100-hour SMAs during the session.
2) Price action is still making the pattern of higher highs and higher lows.
1) BTCUSD has broken below a rising trendline, but barely, so I would rather say that this is a sign that bulls are losing steam, rather than to say that the market has turned bearish.
2) The RSI broke below 40, which reflects loss of the bullish momentum. Again, this is not a bearish sign, but rather a sign that bulls are weak.
3) A head and shoulders pattern is the only bearish sign here .We can see shoulders clearly at 260 with the head at 262 and the neckline at 256, which was a previous resistance area. The fact that price broke below 256 shows that bears could be taking over.

As we can see, the bullish signs outweigh the bearish signs. If price can hold under 260 and fall below 254, then the tide would turn, especially if the 4H RSI also holds under 60, and digs below 30. In this type of scenario, if the prevailing trend were bearish, we can have an aggressive outlook back towards the April low around 239, or even down to the March lows around 236. It so happens, this is the case.

However, if the prevailing trend were bullish, we would look for support in the 248-250 area first.

Bitcoin (BTCUSD) 4H Chart April 7

(click to enlarge)