We broke the 4200 resistance levels and rallied to the high of 5345. Now we are consolidating upon these gains and are sitting at about $5000. While breaking above the 200DMA is medium to long trend reversal for cryptos we will have to retrace these gains to prepare for the next move on the upside and a new wave of buying. The question is how much will we retrace?. I have taken the move from 4200 to the swing high of 5345 and applied fib retracements to give us an idea of where we may find a local bottom. Remember, do not buy these big moves instead buy the pullback for higher winning trades. We have also seen a massive bearish divergence on the 4hr chart indicating that some of these gains will have to be given away in the near future to provide a more long sustainable setup.
1. 50% retracement is around 4770
2. 61.8% retracement is 4638 which is a good support as it coincides with the 200 DMA
3. 78.6% retracement is 4450
If we see a more blown out correction we could even extend to the 50 DMA at 4000 levels. Many analysts have called for the famous double bottom before lift off, while that is definitely possible I feel we have had a solid accumulation phase between the 3400-3800 area, and when in the transistion from a bear market to a bull market previous resistances often offer support. If we for some reason do visit the 3200 lows you can be fairly certain that you have entered at probably the most optimal price in this bear market. However, since we cant predict the future dollar cost averaging can be implemented once we start testing the 200 DMA again!
1. 50% retracement is around 4770
2. 61.8% retracement is 4638 which is a good support as it coincides with the 200 DMA
3. 78.6% retracement is 4450
If we see a more blown out correction we could even extend to the 50 DMA at 4000 levels. Many analysts have called for the famous double bottom before lift off, while that is definitely possible I feel we have had a solid accumulation phase between the 3400-3800 area, and when in the transistion from a bear market to a bull market previous resistances often offer support. If we for some reason do visit the 3200 lows you can be fairly certain that you have entered at probably the most optimal price in this bear market. However, since we cant predict the future dollar cost averaging can be implemented once we start testing the 200 DMA again!