Corn_Reaper
Long

Bitcoin to $4600 on Bitfinex then back towards $3k!

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
Bitcoin just broke out of the larger descending channel which i mentioned was possible in my last post update considering the bullish divergence we had on the 4H. The break never had much conviction nor the momentum for a sustained volume spike, which probably means we haven't tapped into the liquidity of the actual bottom just yet and should resume the downtrend after a short bounce.

Considering the depth of the recent crash and extension of oversold conditions, this didn't come as too much of a surprise, although I don't think price will go higher than $4600 before resuming the downtrend to the lower $3ks where the larger rebound back to the $5ks should happen.

There may be a potential cup & handle playing out for a nice trade setup to $4570.

On the 1H chart we have bearish divergence showing a potential drop towards the handle support. I've set my target to $4570 which is 161.8 fib extension from the cup's swing high. This is also a major resistance area and is a similar distance from the bottom of the cup to the handle's breakout level. I'll set my buy order to slightly above the upper trend line of the handle at $4150 (although this may change if we have a higher swing high near the start of the cup's handle).

For this trade to play out and before placing my buy order, the price should not retrace below 50% from the height of the cup so I've set my stop-loss just below this at $3940.

Good luck and happy trading!

Previous chart:

Comment: Nice squeeze to the upside however I've just realised we have hidden bearish divergence on the 4H chart so not sure we're going to break the $4300 resistance now.

Comment: We even have hidden bearish divergence on the higher time frames too right up to the 1D chart. Looks like we're heading back to test the $3840 and potentially establish a new low.

Comment: New chart:

Comments

That bearish divergence can easily be invalidated if this continues to move higher (thus moving the indicators higher). Also, bearish divergence can be corrected with consolidation, so it might be too early to call for a big move down. We shall see though, will watch this.
Reply
@god, even if the RSI and price head higher, we'll still have the hidden bearish diversion on the 1D unless price breaks $5750 (which is an outside possibility I guess) or if price drops substantially from here to bring the RSI lower. Maybe not new lows just yet but I think we'll be testing the $3500 area soon.
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