HELLO ALL AND GOOD MORNING TO EVERYONE!
First I would like to start off with a quote from a famous economist named John Maynard Keynes - " Markets can remain irrational longer than you can remain solvent."
With all the indicators from price action, volume, momentum oscillators and order books, the unexpected can always happen leaving us dumbfounded in the process. The current state of BTC is a rising consolidation pattern - usually a bearish indication - along side bearish divergences in the momentum oscillator and volume. In this idea, I am going to show how in the past some of the strongest bearish setups have lead to some of the most powerful moves to the upside instead, and how that all relates to what is going on right now.
Last year coming out of that major downtrend BTC formed a rising consolidation pattern that broke up into yet another rising consolidation that gave us the high we saw for that year. Going off by the technicals alone would have made you believe each pattern was the end of the run, either sitting out and waiting for a substantial pullback or attempting to short.
As you can see here as the pattern was reaching the apex, RSI and volume were dropping off. RSI especially was showing consistent bearish divergence the entire way up. This seems to have defied all logic in the traditional sense of what we know about these divergences. The bull trend at that point was so strong that it ignored any bearish indication - or it was used as a ploy to entice unsuspecting bears.
What we have now is a very similar situation to that price action last year coming out of a major downtrend and after a golden cross. Currently in a rising consolidation pattern - still in a strong uptrend since 4k- with a bearish divergence in the RSI. Could we be setting up for a major bear trap at this critical resistance level?
In a bull trend this bearish indication is going to hold less weight and might only substantiate to a minor fall in price rather than a reversal.
This is my opinion and not trade advice.
First I would like to start off with a quote from a famous economist named John Maynard Keynes - " Markets can remain irrational longer than you can remain solvent."
With all the indicators from price action, volume, momentum oscillators and order books, the unexpected can always happen leaving us dumbfounded in the process. The current state of BTC is a rising consolidation pattern - usually a bearish indication - along side bearish divergences in the momentum oscillator and volume. In this idea, I am going to show how in the past some of the strongest bearish setups have lead to some of the most powerful moves to the upside instead, and how that all relates to what is going on right now.
Last year coming out of that major downtrend BTC formed a rising consolidation pattern that broke up into yet another rising consolidation that gave us the high we saw for that year. Going off by the technicals alone would have made you believe each pattern was the end of the run, either sitting out and waiting for a substantial pullback or attempting to short.
As you can see here as the pattern was reaching the apex, RSI and volume were dropping off. RSI especially was showing consistent bearish divergence the entire way up. This seems to have defied all logic in the traditional sense of what we know about these divergences. The bull trend at that point was so strong that it ignored any bearish indication - or it was used as a ploy to entice unsuspecting bears.
What we have now is a very similar situation to that price action last year coming out of a major downtrend and after a golden cross. Currently in a rising consolidation pattern - still in a strong uptrend since 4k- with a bearish divergence in the RSI. Could we be setting up for a major bear trap at this critical resistance level?
In a bull trend this bearish indication is going to hold less weight and might only substantiate to a minor fall in price rather than a reversal.
This is my opinion and not trade advice.