So what has changed in the last couple of weeks? Not much! The FUD surrounding Tether/Bitfinex has somewhat died down and BTC is trying to make up lost ground. Before I give some info regarding my chart and my idea let me first write about what transpired over the last couple of weeks.
Exactly 2 weeks ago on 18th April I went long. The trade was working like a dream until the Tether/Bitfinex news hit and we got a little dump. Immediately after that dump I was reading analysis along the lines of 'BTC drops as expected' or 'Next target 4800'. There was also one entitled '4200 in sight'. This is why I have such a huge issue with TA and especially with the way it's used by 95% of the people out there. All these 'voodoo chartists' do is simply ASSUME that something happens because of a few shapes and lines drawn on a chart. Several hours after the dump we all knew the real reason why BTC dumped. Nothing to do with charts but everything to do with FUNDAMENTALS. Remember there are several thousand technical indicators out there but NOT A SINGLE ONE will tell you where the price will be tomorrow, next week or next month. For me the most important factor to take into consideration when trading is price DIRECTION/MOMENTUM. It's a bit like surfing....once you know what to look for you wait to see that a wave is building then you catch it early and you simply ride it until you've either had enough or until it breaks. You obviously also do things to minimise your risk like take profit, stop loss, resistance zones etc. Anyway, I held onto my positions during this mini dump while others sold.
So what are we seeing now? Well, that mini dump actually produced a higher low which is an extremely bullish sign. Since 10th April we produced a higher high and a higher low. During the mini dump price respected the 21EMA (green line) and is currently rising. Trend is definiately positive, our friend Heikin Ashi, is all green. Because of the mini dump we got some bearish divergence (in red) BUT since we actually made a higher low that turned into a bullish continuation pattern (in blue).
So what's next? Well that's actually the easy part, the way I see it we have two options....there is definitely bullish momentum on the 1D, and if that continues and there is a breakout then 5800 and then 6100 come into play (rough Fibonacci levels). For this to happen we really need to push up through the previous high so price needs to pass 5500 to 5550 level with volume. Also the MACD needs to turn bullish, something it is trying to do as we speak. On the other hand IF we have a reversal from this level and simply fail to gather enough momentum then the outlook will turn bearish and we will inevitably make a lower low. If the bears are not that strong then it might bottom out at 5000. If there is enough bearish pressure then we will go down to 4800. Breaching 4800 would put us on a course towards 4000.
Please note that on the 4H we are overbought (and have been for a while) so a short term price correction to around 5300 is a definite possibility.
Please remember this is not financial advice, always DYOR!!!
Exactly 2 weeks ago on 18th April I went long. The trade was working like a dream until the Tether/Bitfinex news hit and we got a little dump. Immediately after that dump I was reading analysis along the lines of 'BTC drops as expected' or 'Next target 4800'. There was also one entitled '4200 in sight'. This is why I have such a huge issue with TA and especially with the way it's used by 95% of the people out there. All these 'voodoo chartists' do is simply ASSUME that something happens because of a few shapes and lines drawn on a chart. Several hours after the dump we all knew the real reason why BTC dumped. Nothing to do with charts but everything to do with FUNDAMENTALS. Remember there are several thousand technical indicators out there but NOT A SINGLE ONE will tell you where the price will be tomorrow, next week or next month. For me the most important factor to take into consideration when trading is price DIRECTION/MOMENTUM. It's a bit like surfing....once you know what to look for you wait to see that a wave is building then you catch it early and you simply ride it until you've either had enough or until it breaks. You obviously also do things to minimise your risk like take profit, stop loss, resistance zones etc. Anyway, I held onto my positions during this mini dump while others sold.
So what are we seeing now? Well, that mini dump actually produced a higher low which is an extremely bullish sign. Since 10th April we produced a higher high and a higher low. During the mini dump price respected the 21EMA (green line) and is currently rising. Trend is definiately positive, our friend Heikin Ashi, is all green. Because of the mini dump we got some bearish divergence (in red) BUT since we actually made a higher low that turned into a bullish continuation pattern (in blue).
So what's next? Well that's actually the easy part, the way I see it we have two options....there is definitely bullish momentum on the 1D, and if that continues and there is a breakout then 5800 and then 6100 come into play (rough Fibonacci levels). For this to happen we really need to push up through the previous high so price needs to pass 5500 to 5550 level with volume. Also the MACD needs to turn bullish, something it is trying to do as we speak. On the other hand IF we have a reversal from this level and simply fail to gather enough momentum then the outlook will turn bearish and we will inevitably make a lower low. If the bears are not that strong then it might bottom out at 5000. If there is enough bearish pressure then we will go down to 4800. Breaching 4800 would put us on a course towards 4000.
Please note that on the 4H we are overbought (and have been for a while) so a short term price correction to around 5300 is a definite possibility.
Please remember this is not financial advice, always DYOR!!!
Comment:
And there you have it. We shot straight through the 5500 to 5600 resistance zone making a higher high in the process. First target of 5800 was reached and it looks like we will consolidate around the 5700 level for a while.