Good morning, traders. As discussed on last night's live stream, Bitcoin is starting to show some retracement which it needs in order to continue further appreciation. The more controlled the retracement, the more bullish it is. Remember, even though we've had some great bullishness recently, it could potentially be a corrective sequence before a continued bearish movement. Even though I don't believe that is the case at this time, we don't trade on opinions, but instead trade on the charts. So risk management remains key. The thick fib lines are from the entire bullish movement's low at $5755 to its high at $6839.40. The thin fib lines are from the recent movement's low at $6079.30 to its high at $6770.30.
On the 6H chart, we can see that RSI remains overbought and the current support is at the R1 area from two periods ago. OBV continues to print higher highs and lows in agreement with price. This is an indication of a trend. As a matter of fact, OBV has not been this high since June 14th. Last night I said that I would like to see Bitcoin retrace to the dashed line at $6450, but I wasn't sure if it would make it that far. That would put it right around the 50% retracement of the entire bullish movement. My expectation is that we may only see Bitcoin retrace as far as the dotted horizontal line/yellow box at the $6622.40-$6575 level thereby giving it a shallow retracement. When considering this, we can see that Bitcoin had a large, sharp retracement for wave 2 (beyond 78.6%). As such, as long as this wave 4 takes a bit longer to complete, then we may be able to get away with such a short retracement. What we need is for RSI to reset enough so that price can continue pushing once it meets any resistance. My concern is the large green box right above price. This supply zone should give way to price momentum with the next push up, but we need to make sure that Bitcoin has enough pressure behind it while attempting to push through, hence the RSI reset via retracement. Once through the zone, I believe we will see price target $7134.40-$7200. This puts it at a good extension and the next resistance area. The current R2 pivot is at $7155 so that may keep price from reaching the full 1.618. Once this general area is hit, it should lead to a retracement back toward the large green box just breached before further appreciation. What we don't want to see during any of this is a daily close below the lower large green box at $6320. If that happens, I believe we will be headed back down.
Traders shouldn't be getting anxious that price isn't moving fast enough for them. That's an emotional response and will cause more pain than profit in the long run. The fact that Bitcoin hasn't just dropped, so far, during this retracement is a good sign. Traders who are feeling anxious likely have too much money in the market. Emotional responses, negative or positive, are dangerous in the market because they often result in a trader's lack of follow through with their trading plan.
On the 6H chart, we can see that RSI remains overbought and the current support is at the R1 area from two periods ago. OBV continues to print higher highs and lows in agreement with price. This is an indication of a trend. As a matter of fact, OBV has not been this high since June 14th. Last night I said that I would like to see Bitcoin retrace to the dashed line at $6450, but I wasn't sure if it would make it that far. That would put it right around the 50% retracement of the entire bullish movement. My expectation is that we may only see Bitcoin retrace as far as the dotted horizontal line/yellow box at the $6622.40-$6575 level thereby giving it a shallow retracement. When considering this, we can see that Bitcoin had a large, sharp retracement for wave 2 (beyond 78.6%). As such, as long as this wave 4 takes a bit longer to complete, then we may be able to get away with such a short retracement. What we need is for RSI to reset enough so that price can continue pushing once it meets any resistance. My concern is the large green box right above price. This supply zone should give way to price momentum with the next push up, but we need to make sure that Bitcoin has enough pressure behind it while attempting to push through, hence the RSI reset via retracement. Once through the zone, I believe we will see price target $7134.40-$7200. This puts it at a good extension and the next resistance area. The current R2 pivot is at $7155 so that may keep price from reaching the full 1.618. Once this general area is hit, it should lead to a retracement back toward the large green box just breached before further appreciation. What we don't want to see during any of this is a daily close below the lower large green box at $6320. If that happens, I believe we will be headed back down.
Traders shouldn't be getting anxious that price isn't moving fast enough for them. That's an emotional response and will cause more pain than profit in the long run. The fact that Bitcoin hasn't just dropped, so far, during this retracement is a good sign. Traders who are feeling anxious likely have too much money in the market. Emotional responses, negative or positive, are dangerous in the market because they often result in a trader's lack of follow through with their trading plan.
Comment:
During this morning's live stream I mentioned the possibility of the yellow box being reaccumulation on a more micro scale, which would lead to a push through the supply zone before retracement. Apparently, this was the case after all.
