Anpu

BTC | Downtrend Confirmed, New Bottom

COINBASE:BTCUSD   Bitcoin / U.S. Dollar
Despite the look of the Chart, there is nothing complicated in this idea. We will go through everything in order.

Firstly I would explain why I used the headline "Downtrend confirmed". As I wrote in my previous idea the bearish signals overwhelm. The resumption of Uptrend stayed relevant until the recent price decline, that broke the strong support level which has been formed by a candlestick with the most buying pressure. Plus now we have the confirmation from RSI and MFI that this Upward movement was only a retracement, which is normal during downtrend. We will discuss this in details on a "Closer look" chart.

During this Downtrend which is expected to be Mid Term, the Price has to make a very important step. This step will be to form a new bottom. At this point the main question is where this new bottom will be. And here is the thing, we can't say exactly where this new bottom will be formed, because there are a lot of interesting zones and levels, that might be potentially good for this bottom. Nevertheless we have some good clues that can help us to build good assumptions.

We will break down this idea into 3 categories in order not to be confused.
1 - New bottom (here we will discuss how to define it and some more interesting clues)
2 - Current situation (in this category we will consider next possible price behavior and also I will give you useful tools that you can use during a downtrend)
3 - Closer look (here we will take a look on confirmation of a downtrend, plus we will have a closer look on resistances, that are working now)

1 - New bottom

Personally I would not consider an option the Price will return to its previous bottom ($3.100 level or to the range $3.100-4.300). There are two reasons for it -
First: 6 months left until halving. This event is going to increase the prime cost of BTC. To make it clearer look at this:
12,5 btc current reward for the block, divided by 2 we have 6,25 btc - which is a reward for the block after halving. If we take the current production cost which is roughly $3.200 and multiply it by 2 we have $6.400 which must become the lowest point for the bottom after halving. This fact makes the scenario the price will go to its previous bottom hardly to happen, because it means to buy BTC at 50% discount in worst case.
(Nevertheless you should not exclude even this option)
Second - the range $3.100-4.300 might form strong support for the price itself, because there was an accumulation inside this range. Such events might form strong support zones for the price.

2 - Current situation

Strong support which had been formed by a candle with the most buying pressure was broken. This fact signals that downtrend will continue. Plus this breakout opens a way to zone around $7.500. This zone is very likely to play again, because it served as a support and resistance historically, plus it includes 50% Fib retracement level, and the most important it played recently, we saw a big retracement from that zone. It is a short term scenario with high probability.
Also I would recommend you to watch for $6.700-6.200 zone during this downtrend, because this zone is a good candidate for a new bottom. Plus there was a period of a consolidation inside this zone, this fact makes it into a zone of interest, also it contains the strongest Fib retracement levels (78.6%, 61.8% and one more 78.6%. You can see on the Chart how they played during previous downtrend.)
The last for this category are tools that you can use. Firstly I would recommend you to use resistances rather than supports, because they play better during a downtrend and serves good landmarks (supports are weaker). Use 121 MA as a main resistance, and 20 MA as a local resistance, these lines proved their effectiveness during previous downtrend and prove it during current downtrend. Also use RSI and MFI for providing bearish signals, and for confirmations (as an example the reversal of a downtrend by this strong Upward movement was not confirmed by these indicators, and we see that currently price decline.) I showed in my previous ideas how to use them properly.

3 - Closer look

On this Chart we see a confirmation from both indicators MFI and RSI that this Upward movement was only a retracement, but not reversal. The RSI did not fix above its 50 horizontal line and crossed below it, which tells us the price was in overbought conditions. The MFI which is more sensitive (because it uses volumes for its calculations) confirmed the behavior of RSI. As I wrote in some of my previous ideas the RSI uses a zone between 75-50 levels as an overbought during the downtrends.

Conclusion: This downtrend will play an interesting role in BTC history. In order not to be fooled by fakeouts use the tools that have been given in this idea and ideas before. The same tools can also be used as main confirmation in case the price will go in another direction, close above 121 MA with confirmation from RSI and MFI would mean the trend reversal, I wrote about this in details in some of my previous analyzes. Remember market is not static and it is always better to be ready for both options.

Hope you were not confused by this idea and concepts that I tried to explain. Also I hope that this information has been useful to you and some of us will turn it into profitable information.

Please hit the like button if you like the idea. Also write your own thoughts and share your charts

Remember this analysis is not 100% accurate. No single analysis is. To make a decision follow your own thoughts.

The information given is not a Financial Advise.
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@Anpu excellent call
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Anpu mycotoxin
@mycotoxin, Thank you!
Reply
Anpu mycotoxin
@mycotoxin, appreciate it)
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Nice!
+1 Reply
Anpu EXCAVO
@EXCAVO, Thank you!
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Well done!
+1 Reply
Yuriy_Bishko Yuriy_Bishko
@Yuriy_Bishko, don't stop)
+1 Reply
Anpu Yuriy_Bishko
@Yuriy_Bishko, I won't)
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Anpu Yuriy_Bishko
@Yuriy_Bishko, Thank You!
Reply
Well done! Personally I feel that the market is not yet ready for the parabolic growth as the stock markets are reaching new highs(S&P500, NASDAQ), so not hot money inflows into the crypto market as traders are riding it up. Only when stock uncertainty hits, which I expect would be around April 2020 then we will see the big move that was seen in 2017 for crypto markets. My strategy would be to dollar-cost average into Bitcoin during this period of time:)
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