From the looks of things BTC will continue adhering to its historic January slump. On the daily we see saw a spinning top when BTC bottomed out at 9k and today’s candle close was a doji which indicates indecision/exhaustion. The Bears (wallstreet/korea/fudsters – take your pick) have driven BTC as low as they could regardless of what thesis you believe to be the true cause of Wednesdays dip. Price action continues to hug the flat bottom of the kumo closely and will need to penetrate a few key levels before shaking free of the winter blues.
On a more technical note, RSI is still very weak and needs a lot of work before turning bullish again. MACD still bearish but it seems as though the strength of the decline is slowing down. However, we do see price action did not test the 200 EMA or 23.6 fib during the crash while it did bounce perfectly off of its long-term trend line. Lastly, we do see a weak TK cross occurred the day before the crash which in hindsight would have been a strong indicator to exit longs for the time being.
Looking to the future I’d like BTC to break and hold a few key levels:
Break ABOVE 13,850 (Kijun)
Close ABOVE 13,923 (Kumo breakout)
Close ABOVE 14,330 (61.8 fib)
On the 6 hour, we see a bullish MACD cross and an RSI trying to regain lost ground. A death cross of the EMA 50&200 is what will set the stage for future resistance in order for BTC to move bullishly again. Price action is currently trying to close above the Tenkan-sen but will need to close above the 38.2 fib before it can attempt a bullish break towards major resistance which includes the Kijun/EMAs as well as the green horizontal.
On the hourly we see a few interesting bullish indicators. First off, we see that a rising wedge led to a breakdown when price tried to close above the 38.2 fib from the daily. Fortunately, however we see a MACD cross in the making and a bullish kumo twist. Moreover, we see that RSI has stayed bullish above the 50 level. Now if we look more closely at RSI we see a hidden bullish divergence has formed. Even with the breakdown of the rising wedge, RSI has made lower lows while price action has made higher lows. This underlying divergence suggests underlying strength and has confluence with other indicators.
Price action is now toying with the 50 EMA and trying to break out of the kumo. Within the next 12 hours I expect BTC to breakout and retest the 38.2 fib before making it way towards the 200 EMA at 12.5k.
Optimal Re-Entry: 11k (38.2 fib @ 10,947)
Primary Resistance: 12,150 (61.8 fib)
Target Range: 12.8 – 13.5k
Stop/Loss: 10,650
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