Hey guys, I just got back from vacation and I wanted to provide an update for you.
Looking back at my last update, there was a small rally after I spotted the 4 hour bullish divergence but unfortunately it did not lead to much upside with only a 600 point movement before falling back down once again.
The area that it bounced from at 8k was from a pretty important trend line labeled S1.
This trend line seems to be providing support right now so we need to see a bounce from this trend line if we expect any upside in the next couple of days.
The price is also finding support on the 0.5 Fibonacci retrace of 10k down to 6.4k, so there could be a bounce here.
On the flipside, if price breaks down below S1 and the 0.5 fib level, then there is a very good chance we will see a bounce from the 0.618 fib retrace at 7,800 instead. The orderbooks have been showing large buy walls at 7.8k for a couple weeks now and it is still there, so I would be very surprised if it doesn’t bounce hard from this price.
The last chance for bitcoin to recover would be at the bottom of the major support zone in green around 7.5k. Obviously anything below this would essentially wipe out the entire April rally and things could turn ugly very quickly.
I don’t have any strong indication of price movement except the hidden bearish divergence on RSI, but this might have already had its effect on price since we already dropped from 8.6k so I am not going to depend on this anymore.
So for now, I will just stay on the sidelines and see what happens at this S1 trend line. If it breaks to the downside, I will look at the .618 to go long. If it moves up from here I’d only go long if there is large volumes otherwise I will wait until I see price struggling at any of the resistances above then short from there.
Thanks for reading, I hope this helps.
R1 = Resistance trend line from ATH (19.8k) to April high (10k)
S1 = Support trend line from 1.8k (July ’17) to 6.5k (April ’18)
S2 = Support trend line from 5.4k (Nov. ’17) to 6k (Feb ’18) to 6.4k (April ’18)
S3 = Resistance-turned-support trend line from ATH (19.8k) to 17k and to 11.7k. This is the downtrend line that defined the bear market since December and was broken in April.
Looking back at my last update, there was a small rally after I spotted the 4 hour bullish divergence but unfortunately it did not lead to much upside with only a 600 point movement before falling back down once again.
The area that it bounced from at 8k was from a pretty important trend line labeled S1.
This trend line seems to be providing support right now so we need to see a bounce from this trend line if we expect any upside in the next couple of days.
The price is also finding support on the 0.5 Fibonacci retrace of 10k down to 6.4k, so there could be a bounce here.
On the flipside, if price breaks down below S1 and the 0.5 fib level, then there is a very good chance we will see a bounce from the 0.618 fib retrace at 7,800 instead. The orderbooks have been showing large buy walls at 7.8k for a couple weeks now and it is still there, so I would be very surprised if it doesn’t bounce hard from this price.
The last chance for bitcoin to recover would be at the bottom of the major support zone in green around 7.5k. Obviously anything below this would essentially wipe out the entire April rally and things could turn ugly very quickly.
I don’t have any strong indication of price movement except the hidden bearish divergence on RSI, but this might have already had its effect on price since we already dropped from 8.6k so I am not going to depend on this anymore.
So for now, I will just stay on the sidelines and see what happens at this S1 trend line. If it breaks to the downside, I will look at the .618 to go long. If it moves up from here I’d only go long if there is large volumes otherwise I will wait until I see price struggling at any of the resistances above then short from there.
Thanks for reading, I hope this helps.
R1 = Resistance trend line from ATH (19.8k) to April high (10k)
S1 = Support trend line from 1.8k (July ’17) to 6.5k (April ’18)
S2 = Support trend line from 5.4k (Nov. ’17) to 6k (Feb ’18) to 6.4k (April ’18)
S3 = Resistance-turned-support trend line from ATH (19.8k) to 17k and to 11.7k. This is the downtrend line that defined the bear market since December and was broken in April.
Comment:
Just as soon as Bitcoin fell through the bottom of the major support zone, it bounced back up with some volume, but not enough to be convinced this is the low. At least the price is now back at the bottom of this major support zone.
There is a bullish divergence on the 1hr time frame on RSI which is part of the reason we saw a jump this morning. But once again the movement looks very weak just like in my last update when I saw bullish divergences. In that last update, the movement was very weak overall and even though I thought it would lead to at least a temporary jump to the R2 trend line, I must have been overly optimistic because it didn’t amount to much and resumed the downtrend shortly thereafter.
At least here we have a lot more volume to go alongside this bullish divergence. This gives me some hope that now we will see the temporary jump up before resuming downside.
However, we now have several resistances above, with the .618 fib level, the R2 trend line, and the 200day Moving Average in orange above as well.
I’d like to see the price first get past the .618 before looking beyond that. For right now, this little spike seems very weak and I expect it to drop more if the price can’t make it out of this support zone in green.
If it drops, my main focus is on the S1 trend line. This trend line has been formed from 5.4k (Nov. ’17) to 6k (Feb ’18) and recently acted as a very strong support during the end of March right before price exploded in the April rally.
Key
R1 = Resistance trend line from ATH (19.8k) to April high (10k)
R2 = Support-turned-resistance trend line from 1.8k (July ’17) to 6.5k (April ’18)
S1 = Support trend line from 5.4k (Nov. ’17) to 6k (Feb ’18) to 6.4k (April ’18)
S2 = Resistance-turned-support trend line from ATH 0.42% (19.8k) to 17k and to 11.7k. This is the downtrend line that defined the bear market since December and was broken in April.
Just as soon as Bitcoin fell through the bottom of the major support zone, it bounced back up with some volume, but not enough to be convinced this is the low. At least the price is now back at the bottom of this major support zone.
There is a bullish divergence on the 1hr time frame on RSI which is part of the reason we saw a jump this morning. But once again the movement looks very weak just like in my last update when I saw bullish divergences. In that last update, the movement was very weak overall and even though I thought it would lead to at least a temporary jump to the R2 trend line, I must have been overly optimistic because it didn’t amount to much and resumed the downtrend shortly thereafter.
At least here we have a lot more volume to go alongside this bullish divergence. This gives me some hope that now we will see the temporary jump up before resuming downside.
However, we now have several resistances above, with the .618 fib level, the R2 trend line, and the 200day Moving Average in orange above as well.
I’d like to see the price first get past the .618 before looking beyond that. For right now, this little spike seems very weak and I expect it to drop more if the price can’t make it out of this support zone in green.
If it drops, my main focus is on the S1 trend line. This trend line has been formed from 5.4k (Nov. ’17) to 6k (Feb ’18) and recently acted as a very strong support during the end of March right before price exploded in the April rally.
Key
R1 = Resistance trend line from ATH (19.8k) to April high (10k)
R2 = Support-turned-resistance trend line from 1.8k (July ’17) to 6.5k (April ’18)
S1 = Support trend line from 5.4k (Nov. ’17) to 6k (Feb ’18) to 6.4k (April ’18)
S2 = Resistance-turned-support trend line from ATH 0.42% (19.8k) to 17k and to 11.7k. This is the downtrend line that defined the bear market since December and was broken in April.
Now I did expect a stronger bounce with higher volume than this, so there’s a good chance that this bounce will be smaller and just a slight retrace from all the dropping since 8.6k before we continue falling down to lower levels.
For short-term bullish movement, I have some indicators that can support a jump for the short-term. The hourly outlook shows a bullish divergence on the RSI, and the CMF. The MACD also shows a bullish crossover just about to occur.
Before we get too excited, we need things to ramp up more. There was no strong impulsive move from 7.8k, the little amount of buying volume from there was very weak and right now it almost looks hesitant to want to move any further up.
However, if we do get some movement up from this point there aren’t any real resistances in the way until price hits around 8.2k.
This is where I expect the price to fall back down if we see a move up right now. This is right at the confluence of the S1 trend line and the 0.5 fib level. I also drew an extension of the 200day Moving Average in orange of where I think it will move towards, and this will form additional confluence with the other 2 resistance points.
This movement up could end up being a slow crawler over the next couple of days, but it looks very weak right now so don't be surprised if this just falls right back down. And if the price falls below 7.8k at the .618 fib then we will assume much more downside is expected with 7.5k as next support.