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Hinge

BTCUSD 15 min/4H charts (10/26/2018)Good morning, traders. Bitcoin saw another spike overnight, this time to $6450. The volume continues to increase on these spikes which tells me price is near an expansion in one direction or the other, and price continues to consolidate. This has created what Wyckoff termed a hinge (the focal point of converging support and supply lines). Usually, when this occurs at the middle or upper end of the leading buy bar, it indicates that buyers are in control and keeping the gains to a minimum for the time being (i.e. could be considered a bull flag) as there is a lack of sell volume. The descending dashed red line continues to provide resistance at this time. CME Bitcoin futures expire in a couple of hours, so volatility is expected around that time and should lead the charge for a more definitive direction, at least in the short-to-mid term. Shorts and longs are at 50% each on Bitmex and Bitfinex the shorts-to-longs ratio currently sits at 1.4384. As I have continued to discuss, the latter often indicates price appreciation is upcoming as the market is uncomfortable with a strong shorts-to-long ratio. The 4H chart shows a pattern that is similar to what it has shown the past few days - higher lows and lower highs creating the hinge. Volume is the only difference and, as mentioned above, is increasing on the price spikes to the levels seen 10 days ago showing us retail demand. RSI and OBV continue to print descending wedges; a positive break in them signalling bullish momentum. MACD is kissing the signal line and, unless a sudden price drop occurs, should print a bullish cross in 3 hours. As I am writing this, we can see price taking a hit (and finding temporary support at least around the 15 minute pivot), so traders actively trading at this time should be monitoring it. Yesterday's 15 minute descending channel resistance was breached this morning with the spike in price. In terms of volume, the spike this morning was the largest 15 minute volume seen since 10/15. The largest sell volume seen was on 10/24 and even that was less than the previous spikes buy volume on 10/23 and about half of this morning's buy volume spike, signalling demand outpacing supply in this hinge. I have drawn what appears to be the ascending channel price is now traveling within. As mentioned during yesterday's stream, we can see recent hidden bullish divergence as MACD printed a much lower low and price a higher low. We can see a gap has appeared at the R1 pivot at $6424 as well. RSI is almost bullish at 48. The one disturbing indication I see on this TF is OBV. It dropped when price spike suggesting that smart money sold into retail money. It did find support on the previously-drawn dashed black line though so we need to see OBV breach the descending blue line. Breaching the descending red line is a good start. Falling through the ascending red line is not good at all and would mean that short-term longs should be very cautious until a breach of the two aforementioned descending lines. I continue to watch the 1D TR between $6095 and $6587. Once price moves through the resistance or support of this TR, I will evaluate the movement to decide whether I will enter at that time. Until then, all this little movement is nothing more than noise with a risk that is far too great in exchange for any reward for me. Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
BITSTAMP:BTCUSD
by Chris_Inks
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