Good morning, traders. Welcome to Monday and it may not be the Monday many of you had wanted or planned for unfortunately. As I said on Friday, I was expecting volatility by the beginning of the week and here we are with fresh lows as price pushes toward that liquidity just below $5000. This is why I did not go long yet. As I explained during the live streams, what is happening right now was a distinct possibility so the least riskiest option was to wait and see if it happened or re-evaluate price around $6000 if it went up instead. The current drop in price has been printing bullish divergences across just about every TF. The 1D RSI has now hit 14.5, which is significant as is the length of time it has spent in oversold (almost a week now). Price has hit a low of $5050 so far but is encountering a lot of support. I will be watching for an SFP by the end of the daily candle which would require a close above the November 15th low of $5199.80 on Bitstamp. However, that swing low was only a few days ago and SFPs are most powerful when they are separated from the swing low for a greater period of time. Nonetheless, an SFP should result in a decent bounce at the very least.
4H price is attempting to print a steep descending channel with support being found at the equilibrium at this time. I say "attempting" because a channel requires four alternating touches of support and resistance but there are only three so far. If price bounces from/near its local low then, using the width of the descending wedge which would result, we should expect price to target about 775 sats above the breach of the pattern and this would put price right back above $6000/$6100. This 775 sats also happens to be the width of the channel, so even if price prints the channel and then breaks the channel's resistance, we would still expect a move up of about 775 sats from that point. As I mentioned last week, the 1D S4 pivot sits around $4900, so with this morning's move down I wouldn't be surprised to see it targeted. That doesn't mean it will make it that far down, but an attempt to do so would tap the liquidity just below $5000 as I have been talking about and should cause price to rebound sharply, especially with the very low 1D RSI. The 4H S1 pivot sits at $5043 and is currently supporting price. The 4H chart is printing bullish divergence as I type this, but traders will need to monitor price action closely to see whether or not this plays out. The lower lows in price are set so any further downward movement is fine, but we would need to see MACD and/or its histogram printing a higher low. With the local TR playing out as it has, this could very well likely be a terminal shakeout for that TR.
WAVES is seeing a heck of a pump right now, XRP continues to rise as well, and XLM seems to be holding its own. There are likely to be many great buying opportunities as a multitude of alts are significantly in oversold territory on their RSI as well as bouncing off pivots. The two biggest issues most retail traders are experiencing at this moment are emotion and lack of patience. How can we tell? Because of the number of BTCUSD longs and shorts that continue to get liquidated due to this morning's volatility. Retail traders are jumping in and YOLOing their positions (i.e. throwing money at max leverage and praying that price moves the way they want it to).
At this point, price has hit my first target area between $5250 and $5460. We may see a bit more downside, however, which would tap liquidity sitting just under $5000. If price happens to make it that far down, my expectation at this time is to see a good-sized candle as price rebounds out of that liquidity. The buildup of shorts on the shakeout should help fuel upward momentum. I expect to see a Test around the bottom of the 2018 accumulation TR ($5900 area) before continuing higher once buying picks up, but depending on just how much supply has been removed from the market, price may overshoot that level.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
4H price is attempting to print a steep descending channel with support being found at the equilibrium at this time. I say "attempting" because a channel requires four alternating touches of support and resistance but there are only three so far. If price bounces from/near its local low then, using the width of the descending wedge which would result, we should expect price to target about 775 sats above the breach of the pattern and this would put price right back above $6000/$6100. This 775 sats also happens to be the width of the channel, so even if price prints the channel and then breaks the channel's resistance, we would still expect a move up of about 775 sats from that point. As I mentioned last week, the 1D S4 pivot sits around $4900, so with this morning's move down I wouldn't be surprised to see it targeted. That doesn't mean it will make it that far down, but an attempt to do so would tap the liquidity just below $5000 as I have been talking about and should cause price to rebound sharply, especially with the very low 1D RSI. The 4H S1 pivot sits at $5043 and is currently supporting price. The 4H chart is printing bullish divergence as I type this, but traders will need to monitor price action closely to see whether or not this plays out. The lower lows in price are set so any further downward movement is fine, but we would need to see MACD and/or its histogram printing a higher low. With the local TR playing out as it has, this could very well likely be a terminal shakeout for that TR.
WAVES is seeing a heck of a pump right now, XRP continues to rise as well, and XLM seems to be holding its own. There are likely to be many great buying opportunities as a multitude of alts are significantly in oversold territory on their RSI as well as bouncing off pivots. The two biggest issues most retail traders are experiencing at this moment are emotion and lack of patience. How can we tell? Because of the number of BTCUSD longs and shorts that continue to get liquidated due to this morning's volatility. Retail traders are jumping in and YOLOing their positions (i.e. throwing money at max leverage and praying that price moves the way they want it to).
At this point, price has hit my first target area between $5250 and $5460. We may see a bit more downside, however, which would tap liquidity sitting just under $5000. If price happens to make it that far down, my expectation at this time is to see a good-sized candle as price rebounds out of that liquidity. The buildup of shorts on the shakeout should help fuel upward momentum. I expect to see a Test around the bottom of the 2018 accumulation TR ($5900 area) before continuing higher once buying picks up, but depending on just how much supply has been removed from the market, price may overshoot that level.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.