Bittensor (TAO) is currently down about 1%, but it may be forming an inverse head and shoulders pattern on the daily chart. This pattern often signals a shift in momentum after a period of downward movement, hinting at a possible upward trend. The key point to watch is the neckline of this pattern. If TAO breaks above this level, it could aim for $400, which would be an increase of over 65% from its current price. To enter the trade, you can either wait for a clear break above the neckline or look for a price pullback to it for better risk management. TAO is a volatile cryptocurrency, and we’re assessing it based on price movements and technical aspects, not on guesswork. Even with promising setups, we must prioritize risk management because crypto markets can be unpredictable. Proper position sizing and discipline are essential for long-term success. On the TAO daily chart, we see what appears to be an inverse head and shoulders pattern, which may indicate a change in momentum. This is especially relevant after the extended downturn we faced following the market-wide correction in late 2025. A successful breakout could signal the end of this consolidation phase. The critical level is the neckline, which is a barrier to a potential move towards the $400 area. We’ve noticed that open interest in TAO perpetual futures has quietly risen by 15% over the past two weeks, indicating that new capital is positioning itself for a breakout. A clear move above the neckline could trigger a series of liquidations and new long positions. For options traders, the current environment is becoming favorable since implied volatility has dropped to a 90-day low. This decline makes strategies such as buying call options or setting up bullish call spreads for March and April cheaper. A strike price just above the neckline could provide an appealing risk-to-reward ratio in case of a breakout. If you’re trading with leverage, trying to jump in during a breakout candle carries high risk. A more prudent approach is to wait for a confirmed break and a retest of the neckline, using this level as a clear point for invalidation. With funding rates on major exchanges currently neutral, there is minimal cost to holding a long position once you find a good entry point. We need to keep in mind the kind of volatility TAO can exhibit, especially recalling the sharp 40% drop it experienced in just one week during the bull run of mid-2025. Even with a clear technical setup, maintaining disciplined position sizing and setting defined stop losses are crucial. This setup will fail if we see a strong rejection at the neckline and a break below the right shoulder.

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