Full RSI cycle (hi-lo-hi) but lower price = more bear to come

BTCE:BTCUSD   Bitcoin / U.S. Dollar
823 9 19
While we may still have some oomph left in this rally (settling in the low 300s for a while), the daily RSI is showing a perfect cycle from HI in Nov 12, 2014 to LOW in Jan 13, 2015 and back to the same HI here in March 11. Each wave is almost perfectly two months long. But while RSI has formed a totally flat top, the price from the november peak to today is greatly reduced. This forms what @4xForecaster likes to call "negative divergence", and is indication of further bearishness to come (even if not immediately)

The pink scribble was something I sketched about a month ago (starting at the pink arrow), and I haven't been following the action since on anything smaller than Daily. But it's clear that despite all the noise on the smaller timeframes, this Daily route is working out nicely ;-) Eventually we'll run into the daily 200MA and coil around it for a while before slipping off (possibly similar to late summer 2014). I would expect resistance around $320 BTCE. Could take some time in that zone for bull pressure to fizzle. We could spend a whole month up here before the bulls give up, so no, I'm not calling for an imminent drop, but this isn't the kind of formation that precedes a big bull stampede...

If this plays out, I would expect the next drop to at least retest the $160 low zone (for a nice double bottom ), with the potential to reach all the way to $123 in a panic spike.
I gave the bulls one last chance by redrawing the local channel to have a slightly shallower angle, and for a moment it looked like another mini-rally was possible, but they fell out of this channel as well. Not much left to hang onto, so back to the bear fork...
+1 Reply
we appear to be busting the floor of the recent rising channel. Looking back at every other time that's happened since the bubble peak, it's resulted in a very red shade of waterfall for a month or more...
+2 Reply
looks like another leg up into the sell zone is forming. could still take many days, but historic resistance, MA, and bear market roof line shows a hard max of $318 on any rally into the sell zone
Sudden drop today but still inside the rising trendline so far. We could still reach for the 200MA before bulls give up completely. Or we could be seeing the start of the slide already. Looking back at the flash crash spike to $102 back in Februrary 2014, maybe that low is foreshadowing the final solid bid support we'll see on this next leg down. Might form a nice ABCD in the process.
Agree, this is a possibility - up to the 200 MA as in June last year, then ride with it before dropping eventually to new lows. But if its going up further now think its running out of time to do so. Either its going up further or its already topped imo.
forgot to show the big bear ceiling line coming down from the bubble top (dotted blue). It also conveniently intersects this same resistance zone, where we'll get tangled up with the 200MA.
Good to see you Ron. Nice chart, as always.
+2 Reply
I love this a lot and it is at the very tip of my mind. What do you think of the bullish divergence from underneath?
depends. chart?
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