Bitcoin Reverse Head and Shoulders Completed on Hourly

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
On the hourly analog Bitcoin Bitfinex chart, you can see how critical that black horizontal line is at $6,000 for long-term and current support, but it was dire straits for the bulls last Friday night heading with price heading down to $5,910.

The bulls recovered into Saturday briefly before touching the light blue 50 hour moving average line and quickly heading southward, getting crushed through that $6,000 level on huge volume all the way down to a low of $5,755 before a massive buy wall was hit and rallied price decisively back above the 50 hour MA to $6,230.

Since then price has trended sideways for the most part with another quick dip down down to the 50 hour MA this morning and rallying on relatively big volume an hour later.

In all the chaos, I have identified a reverse head and shoulders bottom that has already completed on the candle from 10am EST this morning breaking the neckline at $6,235 which is also the outside of the blue 1 standard deviation channel.

Price has now come back down to retest this neckline at 3pm EST, and has bounced ever so slightly. I do not like that the volume has not been increasing since then to indicate confirmation of a bullish pop, but it could still come. What I do like overall is the volume that I have circled in black at the shoulder head and shoulder points.

The RSI is getting into slightly overbought territory, but still has room where it could run higher. There is also solid bullish divergence showing up from the lows over the weekend here that I have marked with a pink up trending line on the RSI indicator.

The MACD also has good bullish divergence now too, even though the trigger line is beginning to curl downward bearishly and the histogram is trending lower. It may take a few hours for price to sit around this level to reset some of these indicator before the next move.

I could bullish target could be that 200 hour moving average at $6,421 in the red channel of the pitchfork and to the downside another retest of that $6,100 level at the 50 hour moving average. The goal for the bulls is to break the outside of that red channel on the pitchfork though at about $6,450 and then a relief rally will be on.

On the daily analog Bitcoin Bitfinex chart, things are looking pretty good for a bullish relief rally. After that big red candle on Friday, the candles over the weekend for the bulls have been quite resilient.

If you take a look at the volume on here, there is a distinct uptrend in the volume candles and price is also visibly trending upward as well. The volume wasn't there on past “rallies” on this downtrend over the last few weeks, so this is definitely an encouraging sign, but as usual the volume needs to continue.

I have added the Parabolic SAR indicator on here as well to help identity when this downtrend will switch bullish . The indicator is located on the price chart with those little dots above or below price. When the price jumps above or below those dots it is an indication of a trend change.

For this chart there is a convergence with the top of the down-trending pitchfork on where the trend will change and that price is again around $6,600. If price does manage to break above there, a rally up to $7,100 would be a nice level in the short term. On the downside, the bottom of the pitchfork at around $5,500 as a target.

On the RSI indicator there, is a distinct bullish divergence from the price lower lows to the RSI higher lows. I have marked that with a blue up-trending line on the indicator. You can also see how back at the beginning of May the RSI picked up the bearish divergence that I have marked with the pink down-trending line.

The MACD has also coiled and looks ready to pop up here as well. There could be more downside here, but overall, you don’t want to be switching bearish on day 50 of a downtrend.

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