In my previous post on Bitcoin, I highlighted that we were still too early for a break-out of the 10K resistance line and that we would fall back. We actually fell back a little more than I expected, because I was relatively impressed by the upward momentum at the time. However, following TA theory, if we don’t break the resistance, we fall back to support, in this case, firstly represented by the blue line, then Bitcoin fell to the next – the white line – and is now trading at the Fibonacci bottom of this spectrum.
If we break this, the light blue line might come into place around $7,5K, but I think this will not happen. If we look at the 4-hourly chart, we see that we are back in oversold areas, and that indicators will soon start to look .
This is a quick post to give you some insight on the different levels of the graph, hope you find some interesting information :)
You can already see on the 1hourly chart that we have a bounce on that bottom level, including a golden cross in the and an upward curve in the from oversold levels:
On the 4-hourly, that is translating into a Heikin Ashi (the last candle stick with straws at both sides), which is a typical trend reversal indicator.
Given the above information, it is likely that we will at least first see a bounce, and have to follow up what will happen after that.
Zooming out on the daily, we also see that the will make a bull cross, and that is practically oversold.
It seems like this might be one of the last stutters before the big break-out at $10K.
On the weekly, you simply have to look at the , which is about to make a BIG bull cross, suggesting we are indeed closing in to a much more character.
Forgive me for all the lines in the zoom-out, but simply look at the correction figure drawn over the graph. This might suggest that we are indeed getting started at a new bull run for that matter.
Again, this is a quick post to give you some insight on the different levels of the graph, hope you find some interesting information :)
In any case, there will be a bounce now, and given the overall indicators story, we should logically go up soon.
We need a doji on that daily. But indicators are starting to look good.
Especially when we zoom in on the 4-hourly, where we are forming a bottom (and golden cross in MACD + oversold RSI curving upward):
Moreover, as you can see, I drew a red line, which is the line connecting the bottoms that are currently forming a higher high and higher lows formation (which is bullish). If price breaks through that red line we are actually breaking that formation, which would be bearish.
The two white lines that you see then, are the 6,4K bottom of March 29-30, and the 6K bottom of 6K. We really need a bounce on the red line IMHO.
Important bounce, but we need more (get back above the blue line)
On the topic of "what are Heikin Ashi candles" - I'm copy pasting an explanation from one of my previous post:
Sidenote on Heikin Ashi (feel free to skip this)
The difference lies in how candle sticks are calculated:
Close = (open + high + low + close) / 4
High = maximum of high, open, or close (whichever is highest)
Low = minimum of low, open, or close (whichever is lowest)
Open = (open of previous bar + close of previous bar) / 2
FYI: A doji candle is a commonly found pattern in a candle stick chart, characterised by being small in length - meaning a small trading range - and with an open - and close price that are virtually equal.
FYI2: A spinning top is another Japanese candle stick pattern with a short body found in the middle of two long wicks.
FYI3: Heikin Ashi candles can be found in Trading view under the candle stick section and by clicking the 4rd option; these work somewhat differently than regular candle sticks.
On the topic of "why are they interesting to use?":
Basically, they very clearly show the trend of the price. If you see a green candle with a straw upward, then you can reasonably expect the next candle to be relatively similar. As soon as a doji occurs, then you have a potential trend reversal. Taking that into account with several indicators, you can derive more understanding on what the next price movement will be (i.e. trend reversal / sideways trading). For instance, in my post on when I called the trend reversal on ETH, I did so by identifying a doji candle right there at the bottom, together with a golden cross in the MACD etc. I was actually one or two candle sticks early, as there was a little bit of sideways movement ("bottoming") after which a heikin ashi doji signalled the time for an uptrend. -->
Note that the doji should be followed by a candle or so in the opposite direction of the previous trend, to be allowed to speak of a trend reversal confirmation (volume, breaking a certain resistance / support level / etc.)
In any case, this makes your chart easier to read. But also, don't forget to look at specific candle formations (the same rules still apply as with normal candles, in the sense of engulfing patterns, etc.)
conclusion: HA candles can make it easy to spot trend reversals ;)