The bullish scenario if this is actually an ascending triangle.
Updated
Good day Traders
The way i see it, Bitcoin is either in an ascending triangle or it has broken out of that bearish pennant which could take us down further to retest our lows, however, I don't think we should be one dimensional with these chart patterns and more often than not, an open mind is required (and proper risk management) if you don't want to consistently be caught holding bags in this market.
Although I still have a bearish mid term target, a few bullish signals have emerged which can not be ignored. It is very possible that this is actually an ascending triangle and that our trend line support is actually connecting the 7 December low to the 27 December low which means that we might have potentially just found the triangle support, and besides a few outlying candles, the supporting trend line still fits the general structure of an ascending triangle. Our daily MA50 is also now holding as support for now although its worth keeping an eye on in case we drop below it on the daily close. On the other hand, as per my previous post, this might actually be a breakdown from a bearish pennant and the new lows are set to be tested sooner rather than later. In this instance, it's best to use a stop loss above our $4230 recent high if you're short and below our previous $3630 low on 1 Jan if you're long.
I don't believe we have found the bottom yet and there will be more pain to come in the coming weeks, however, there's a chance that we have a short-lived upwards correction towards 5k and our daily SMA100 for another flush of weak hands before we do find those lows and possible capitulation.
We also found major trendline resistance from our ATH $19666 (forgot to add to chart) which is exactly where we dropped from this morning so if we have a bullish breakout from the triangle, we also break above significant trend line resistance.
My bullish target is $4925 which is a 161.8 fibonacci extension from our wave up between our $3122 low for 2018 and our recent high of $4236 on 24 December after (close to) a 61.8 fib retracement on the next wave down, however, we will have strong resistance from $4700 (141.2 fib ext). Our wave up from our recent 27 December low ($3566) to our recent high of $4112 resulted in a 61.8 fib retracement with the drop this morning so if this ascending triangle breaks to the upside, we should reach our first target at $4450 (161.8 fib extension) before retracing back to the triangle to retest as support at around $4100. We should then have our break towards the final target from there.
Looking at the 4H Money Flow Index, we have regular bullish divergence (see arrows) and we still haven't broken our uptrend support with this drop, in fact MFI never dropped much at all with this flash crash, definitely notable divergence there. RSI is also oversold on the lower time frames which gives credence to a potential move back inside the triangle. Best advice is not to day trade right now, prepare and wait for the big move instead.
Target 1: $4450
Target 2: $4925
Stop (Bears): $4240
Stop (Bulls): $3620
Good luck and happy trading!
Previous post:
The bearish scenario:
The way i see it, Bitcoin is either in an ascending triangle or it has broken out of that bearish pennant which could take us down further to retest our lows, however, I don't think we should be one dimensional with these chart patterns and more often than not, an open mind is required (and proper risk management) if you don't want to consistently be caught holding bags in this market.
Although I still have a bearish mid term target, a few bullish signals have emerged which can not be ignored. It is very possible that this is actually an ascending triangle and that our trend line support is actually connecting the 7 December low to the 27 December low which means that we might have potentially just found the triangle support, and besides a few outlying candles, the supporting trend line still fits the general structure of an ascending triangle. Our daily MA50 is also now holding as support for now although its worth keeping an eye on in case we drop below it on the daily close. On the other hand, as per my previous post, this might actually be a breakdown from a bearish pennant and the new lows are set to be tested sooner rather than later. In this instance, it's best to use a stop loss above our $4230 recent high if you're short and below our previous $3630 low on 1 Jan if you're long.
I don't believe we have found the bottom yet and there will be more pain to come in the coming weeks, however, there's a chance that we have a short-lived upwards correction towards 5k and our daily SMA100 for another flush of weak hands before we do find those lows and possible capitulation.
We also found major trendline resistance from our ATH $19666 (forgot to add to chart) which is exactly where we dropped from this morning so if we have a bullish breakout from the triangle, we also break above significant trend line resistance.
My bullish target is $4925 which is a 161.8 fibonacci extension from our wave up between our $3122 low for 2018 and our recent high of $4236 on 24 December after (close to) a 61.8 fib retracement on the next wave down, however, we will have strong resistance from $4700 (141.2 fib ext). Our wave up from our recent 27 December low ($3566) to our recent high of $4112 resulted in a 61.8 fib retracement with the drop this morning so if this ascending triangle breaks to the upside, we should reach our first target at $4450 (161.8 fib extension) before retracing back to the triangle to retest as support at around $4100. We should then have our break towards the final target from there.
Looking at the 4H Money Flow Index, we have regular bullish divergence (see arrows) and we still haven't broken our uptrend support with this drop, in fact MFI never dropped much at all with this flash crash, definitely notable divergence there. RSI is also oversold on the lower time frames which gives credence to a potential move back inside the triangle. Best advice is not to day trade right now, prepare and wait for the big move instead.
Target 1: $4450
Target 2: $4925
Stop (Bears): $4240
Stop (Bulls): $3620
Good luck and happy trading!
Previous post:
The bearish scenario:
Note
Another thing I noticed is that Bitfinex longs have dropped off sharply but we don't have that corresponding rise in shorts. This is bullish and shows that the bears aren't overly confident right now.Note
Well we got our answer and the move was big as expected ($450 drop yesterday), my bearish stop was hit but we're still holding the $3600 support on Bitstamp which is good to see. I think we'll have at least a 38.2 - 50 fib retracement from here ($3742 - $3804) where we will again meet our daily SMA50 resistance. RSI is extremely oversold now on the 2H/4H so not expecting to drop much further just yet. Our MFI broke its uptrend with the second drop and should retest trend resistance. Note
**edit: 38.2 - 50 fib retracement from here ($3735 - $3807)
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