Bitcoin's diamonds (part 2) Daily chart
Good morning, traders. Remember, CME Bitcoin June Futures expire at 10 a.m. CST this morning (cmegroup.com/trading/equity-index/us-index/bitcoin_product_calendar_futures.html), monthly close is tomorrow, and weekly close is on Sunday. So as I've mentioned in the live stream, any potential reversal that may occur could happen at any time today through Sunday. This doesn't guarantee we will see a reversal, just that there are multiple important events culminating this weekend which could add to its strength if we do see it but which leave the window open for timing.
We saw a strong jump in BTCUSD Shorts this morning while Longs continue to grow. This isn't an ideal situation for Shorts. Based on how quickly they jumped and where price is currently located, they are likely over-leveraged retail Shorts which means any pop up in price will liquidate them pretty quickly causing many traders who aren't liquidated to have to cover their own Shorts as a result. This doesn't mean such a thing will happen immediately, just that the risk to reward ratio is pretty poor at this point. Too much risk opening a fresh short for the reward that one may receive by being correct.
Price continues to follow the April pattern at this time. As we can see, the daily candle is sitting right on the blue line. Price is currently moving within a descending wedge within a descending channel. The expectation, based on the pattern, is a breach of the wedge's resistance. There is the possibility we could see a sudden drop in price leading to capitulation and subsequent large, fast rebound before the break of the resistance comes to fruition. In that case, many traders will likely be stopped out and/or liquidated on margin due to an inability to log into the Web-based interface of their exchange during that strong price action and/or failure of the exchange to execute their take profit. RSI is nearing a breach of its own resistance, as is OBV which has bounced off support its support level that dates back to October 2017.
On the shorter term charts, price may be building another diamond pattern. There is strong volume throughout price movement within the pattern, which is important. As always, I am watching for a breach of the blue lines in either direction with the resultant resistance and support lines providing likely initial targets. RSI is attempting to breach resistance on the 1h and 4h charts. Fib congruence levels (where fib levels from multiple fib pulls come congregate) are important indications of support and resistance and should be monitored as well.
We saw a strong jump in BTCUSD Shorts this morning while Longs continue to grow. This isn't an ideal situation for Shorts. Based on how quickly they jumped and where price is currently located, they are likely over-leveraged retail Shorts which means any pop up in price will liquidate them pretty quickly causing many traders who aren't liquidated to have to cover their own Shorts as a result. This doesn't mean such a thing will happen immediately, just that the risk to reward ratio is pretty poor at this point. Too much risk opening a fresh short for the reward that one may receive by being correct.
Price continues to follow the April pattern at this time. As we can see, the daily candle is sitting right on the blue line. Price is currently moving within a descending wedge within a descending channel. The expectation, based on the pattern, is a breach of the wedge's resistance. There is the possibility we could see a sudden drop in price leading to capitulation and subsequent large, fast rebound before the break of the resistance comes to fruition. In that case, many traders will likely be stopped out and/or liquidated on margin due to an inability to log into the Web-based interface of their exchange during that strong price action and/or failure of the exchange to execute their take profit. RSI is nearing a breach of its own resistance, as is OBV which has bounced off support its support level that dates back to October 2017.
On the shorter term charts, price may be building another diamond pattern. There is strong volume throughout price movement within the pattern, which is important. As always, I am watching for a breach of the blue lines in either direction with the resultant resistance and support lines providing likely initial targets. RSI is attempting to breach resistance on the 1h and 4h charts. Fib congruence levels (where fib levels from multiple fib pulls come congregate) are important indications of support and resistance and should be monitored as well.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.