Bitcoin is on the fence and could literally go either way. Naturally, this doesn't aid us much in our position decision making. Yet, with the right technical clues we can make sure we enter when we face the highest probability of success in combination with the lowest level of risk. And that's precisely what we'll discuss in this week's analysis.
Now, I could give you a check mate argument for either the bulls or the bears. The only thing we know for sure is that the technical setup is conducted in a way that we can anticipate a violent reaction in either direction - as in whatever direction Bitcoin ultimately chooses.
But before we go down that road it is paramount to understand that Bitcoin itself has no clue of where it's going. All it's done it to prepare a grand setup for either direction and with a grand explosiveness behind it. Nothing else. For at the end of the day, much of Bitcoin's direction does come down to whether Putin escalates things - and worse come to worst slams that dear nuclear button of his. Hence much of the fate of the markets now come down to crude macros.
Bitcoin is clearly in an ascending triangle. So far, so good. There's really nothing to discuss here.
A few weeks back, we did get a clear lower bullish red closing on the weekly chart - and at the very local bottom at that, as always. And given the high RSI levels from which this signal sprung, it is clear to us that is defines the very end of a 4th wave correction. Given that it doesn't get stopped out, that is.
On the daily chart, however, there are a few key obstacles we need to overcome before we have a "safe" green light to proceed with longs (for the record, nothing is ever safe when it comes to trading and TA - we're simply dealing with game theory and probabilities here).
Firstly, we have a symmetrical triangle in the RSI
The reason why this is relevant at all is because a breakout from this, which would stem from technical pressure having built up, would be an early clue of a breakout from the ascending price triangle. The extra power from such RSI triangle breakout could easily catapult the price through and beyond its horizontal resistance. At the moment the RSI is literally trading on the RSI triangle resistance on the daily chart.
Secondly, throughout this triangle we've already seen textbook rejections of the EMA100 line. With that said, however, the typical playbook is for a gradual decline of MA rejections, thus moving from the EMA50 to the EMA100 and ultimately testing the EMA200 prior to being ready for a breakout. Here, in this case, we saw no such EMA50 action.
My point here is rather that once we do push through the EMA100, the next one in line is the EMA200, which just so happens to perfectly align with the triangle resistance.
What I expect to see here is at least some sort of price rejection prior to being ready for its breakout. The beautiful part here is how the statistical breakout point - as in two thirds into the triangle - would perfectly align with a minor price rejection prior to pushing through.
Basically, my point is this: A breakout of the symmetrical RSI triangle in combination with an ascending price triangle breakout would be the ideal long setup as it'll be not just doubly but "triply" confirmed. In this case the triple comes from the maximally early lower bullish red signal on the weekly RSI (for more details on the RSI and these strategies I advice you to watch the extensive RSI trilogy).
However, on the contrary, Bitcoin is by no means out of the bearish bush yet. If the price would struggle to break above this EMA100 line and rather resort to dwelling around the diagonal support, things will swiftly swap to being inherently weak and with a clear bias on the downside.
In such case, a break below this triangle support would be an ideal spot for shorts. Just don't forget to apply a tight stoploss as we've already seen a fakeout from this triangle on the downside.
And if the lower bullish red signal were to get cancelled out on the weekly chart, then by all means fasten your seat belts. Stopped out LBR signals have a tremendous tendency of plunging the price down steep and aggressively. Neither do I expect this to be any exception.
/Long Life Trading
Now, I could give you a check mate argument for either the bulls or the bears. The only thing we know for sure is that the technical setup is conducted in a way that we can anticipate a violent reaction in either direction - as in whatever direction Bitcoin ultimately chooses.
But before we go down that road it is paramount to understand that Bitcoin itself has no clue of where it's going. All it's done it to prepare a grand setup for either direction and with a grand explosiveness behind it. Nothing else. For at the end of the day, much of Bitcoin's direction does come down to whether Putin escalates things - and worse come to worst slams that dear nuclear button of his. Hence much of the fate of the markets now come down to crude macros.
Bitcoin is clearly in an ascending triangle. So far, so good. There's really nothing to discuss here.
A few weeks back, we did get a clear lower bullish red closing on the weekly chart - and at the very local bottom at that, as always. And given the high RSI levels from which this signal sprung, it is clear to us that is defines the very end of a 4th wave correction. Given that it doesn't get stopped out, that is.
On the daily chart, however, there are a few key obstacles we need to overcome before we have a "safe" green light to proceed with longs (for the record, nothing is ever safe when it comes to trading and TA - we're simply dealing with game theory and probabilities here).
Firstly, we have a symmetrical triangle in the RSI
The reason why this is relevant at all is because a breakout from this, which would stem from technical pressure having built up, would be an early clue of a breakout from the ascending price triangle. The extra power from such RSI triangle breakout could easily catapult the price through and beyond its horizontal resistance. At the moment the RSI is literally trading on the RSI triangle resistance on the daily chart.
Secondly, throughout this triangle we've already seen textbook rejections of the EMA100 line. With that said, however, the typical playbook is for a gradual decline of MA rejections, thus moving from the EMA50 to the EMA100 and ultimately testing the EMA200 prior to being ready for a breakout. Here, in this case, we saw no such EMA50 action.
My point here is rather that once we do push through the EMA100, the next one in line is the EMA200, which just so happens to perfectly align with the triangle resistance.
What I expect to see here is at least some sort of price rejection prior to being ready for its breakout. The beautiful part here is how the statistical breakout point - as in two thirds into the triangle - would perfectly align with a minor price rejection prior to pushing through.
Basically, my point is this: A breakout of the symmetrical RSI triangle in combination with an ascending price triangle breakout would be the ideal long setup as it'll be not just doubly but "triply" confirmed. In this case the triple comes from the maximally early lower bullish red signal on the weekly RSI (for more details on the RSI and these strategies I advice you to watch the extensive RSI trilogy).
However, on the contrary, Bitcoin is by no means out of the bearish bush yet. If the price would struggle to break above this EMA100 line and rather resort to dwelling around the diagonal support, things will swiftly swap to being inherently weak and with a clear bias on the downside.
In such case, a break below this triangle support would be an ideal spot for shorts. Just don't forget to apply a tight stoploss as we've already seen a fakeout from this triangle on the downside.
And if the lower bullish red signal were to get cancelled out on the weekly chart, then by all means fasten your seat belts. Stopped out LBR signals have a tremendous tendency of plunging the price down steep and aggressively. Neither do I expect this to be any exception.
/Long Life Trading