On the hourly Bitcoin Bitfinex chart, we are looking at the beginnings of a decent consolidation and possibly accumulation pattern. Price stabilized for the majority of the past 24 hours around $6,300, while a blue ascending triangle formed with the resistance sitting at the .786 Fib retracement at $6,343. Price then began to roll over earlier this morning on weakening volume and a fake-out occurred with price bouncing off the lower end of the green channel.
With that, the bulls went on a bit of offense taking price back up to the orange 55 hour EMA line at $6,523. The bears won’t relinquish much more ground from there though as we now have 3 wicks poking up through that level.
I would expect price to move back down and test that turquoise 21 hour EMA line first, before maybe another attempt to break through the 55 EMA line. A crossover of the 21 EMA back above the 55 EMA would be a positive sign for further bull relief and I think we could see a situation where price possibility rallies back to the outside of the blue channel within the pitchfork at the green target.
Overall though the trend still remains in the bears favor. The volume that the bulls mounted earlier today was not enough to top the bearish volume yesterday. If price does roll over and not hold that $6,340 level at the blue horizontal line we could see another torrent of selling.
The RSI is sitting at 56.76 and appears reset for lower lows, the MACD blue trigger line looks like it could begin to cross over and head down and the histogram is already reflecting that too.
Today I want to take a look at the weekly analog Bitcoin Bitfinex chart, because it’s been a while. I have drawn a Fibonacci Retracement from the flash crash low from the week of February 10th, 2014 to the peak in December and you can see how that golden area between green .618 and turquoise .65 Fib has been broken.
Price gave a decisive bearish engulfing candle last week and this week has had some good follow-through, however we are back this floor that the bulls have put up around the $6,400 to $6,000. Depending on how you look at it, it could be a descending triangle that could break lower or a falling wedge that could possibly break higher. There have been 3 touches on either sides of these formation, so price is bound to break one way or the other in the next few weeks.
In conjunction with the theme of 2018, the blue .786 level is down around $4,343, and the other theme has been these fake-outs that we just mapped out on the hourly chart where price breaks one way and heads the other.
I am wondering if we could see some sort of break down out of this triangle to the .786 Fib only to see a violent price rally the other direction. Something that would rip the faces off of the shorts that could have just joined the party.
That would provide a great capitulation event for all the retail investors and a fantastic buying opportunity for the big money waiting to get in the game at a discount. Maybe it’s even set off by a ETF approval event.
The RSI is relatively neutral sitting at 44.37 and it would be nice to see a touch of the oversold level at 30 before the next leg up. The MACD is also looks set to break higher as well as soon as that blue trigger line can cross over the orange one.
The MACD histogram hasn’t ticked above the zero bound since Jan 22nd 2018 and the last time it was negative besides this bear market was Oct 2016. This actually could be similar price action to Dec 2014 when the blue trigger line almost crossed over but headed lower for one more leg down before moving up and decisively crossing through. This would also coincide with one more big capitulation event.
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