Potential Bullish Rally to Next Major Resistance?
Updated
Hello friends, it has been a while! I have been busy working, reading, and studying. This is a quick analysis, something that has come to mind, but incredibly tentative. I think it is too early to call anything, and this is very likely a premature analysis. More information, I think, is required before identifying any solid trade. This is therefore more for reference and for tossing out an idea.
BTCUSD seems to have enjoyed a move upwards from what may have very well been the bottom at ~$3750, bouncing off of the long-term support zone and making a rally upwards to $5000 and beyond:
From then on, BTCUSD has enjoyed successive increasing highs and lows, suggesting a bullish trend. Whether or not this will maintain, I am uncertain, but this could very well be a move towards testing the ATH, or perhaps creating a sideways market from then onwards.
After this pullback, I have been wondering on what the next move is. The daily suggests consolidation, and the RSI/Stoch RSI suggests it is currently oversold; given the current upwards trend, it is not too unreasonable to expect a move further upwards.
However, the 4 hour RSI suggests an overbought asset, and furthermore, any attempt at drawing a kind of "bull flag" does not suggest a breakout of any sort; aside from the lack of any aggressive rally, there is little volume.
What might be going on?
There is a set up for a neckline based on the Fibonacci lines drawn from the most recent rally. Furthermore, the moves upwards in the creation of the potential left shoulder and head have similar volume; typically the rally creating the head should have a bit more volume than the one creating the left shoulder, and this requirement is somewhat fulfilled. Thus, the most critical piece in confirming this will be the break from the neckline with high volume, an aggressive move which breaks through the major resistance at around $13,000 (positioned here at around $12,898), and continues forward to the next one. Conveniently, this would also hit the potential daily bull flag's target, which makes this a stronger possibility.
The target for the inverted head and shoulders pattern would be a close at around $14,800, likely reaching a high at around $15,000. Perhaps with enough bullish sentiment it may even reach $16,000 straightaway! But that is difficult to predict, and is out of our reach until more information develops.
Therefore, to summarize:
1. Low RSI on the daily suggests bullish movement
2. High RSI on the 4 hour may suggest a small move downwards
3. Current uptrend would suggest future bullish movement until invalidated
4. Smaller timeframes can lead to a inverted head and shoulders pattern, which would validate the move upwards
5. (Tentatively defined) bull flag on the daily which happens to correspond with the next major resistance.
I'm experimenting with some drawing tools like the annotation bubbles, which aren't perfect, but I think may still help. Looking to continue improving.
And as always, friends, please trade with care! Any feedback/comments are much appreciated!
BTCUSD seems to have enjoyed a move upwards from what may have very well been the bottom at ~$3750, bouncing off of the long-term support zone and making a rally upwards to $5000 and beyond:
From then on, BTCUSD has enjoyed successive increasing highs and lows, suggesting a bullish trend. Whether or not this will maintain, I am uncertain, but this could very well be a move towards testing the ATH, or perhaps creating a sideways market from then onwards.
After this pullback, I have been wondering on what the next move is. The daily suggests consolidation, and the RSI/Stoch RSI suggests it is currently oversold; given the current upwards trend, it is not too unreasonable to expect a move further upwards.
However, the 4 hour RSI suggests an overbought asset, and furthermore, any attempt at drawing a kind of "bull flag" does not suggest a breakout of any sort; aside from the lack of any aggressive rally, there is little volume.
What might be going on?
There is a set up for a neckline based on the Fibonacci lines drawn from the most recent rally. Furthermore, the moves upwards in the creation of the potential left shoulder and head have similar volume; typically the rally creating the head should have a bit more volume than the one creating the left shoulder, and this requirement is somewhat fulfilled. Thus, the most critical piece in confirming this will be the break from the neckline with high volume, an aggressive move which breaks through the major resistance at around $13,000 (positioned here at around $12,898), and continues forward to the next one. Conveniently, this would also hit the potential daily bull flag's target, which makes this a stronger possibility.
The target for the inverted head and shoulders pattern would be a close at around $14,800, likely reaching a high at around $15,000. Perhaps with enough bullish sentiment it may even reach $16,000 straightaway! But that is difficult to predict, and is out of our reach until more information develops.
Therefore, to summarize:
1. Low RSI on the daily suggests bullish movement
2. High RSI on the 4 hour may suggest a small move downwards
3. Current uptrend would suggest future bullish movement until invalidated
4. Smaller timeframes can lead to a inverted head and shoulders pattern, which would validate the move upwards
5. (Tentatively defined) bull flag on the daily which happens to correspond with the next major resistance.
I'm experimenting with some drawing tools like the annotation bubbles, which aren't perfect, but I think may still help. Looking to continue improving.
And as always, friends, please trade with care! Any feedback/comments are much appreciated!
Note
Thinking this out more, something doesn't feel right about this analysis. I don't think that we have a bullish pennant yet; I feel more likely, that something like the below will happen, if we are forming one. It is likely too early:
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