Bitcoin headed downward and broke upward support (blue line) slightly about 12 hours ago as I discussed yesterday to near 56.5K and has since retraced back upward. However, on the way up, it looks like some bearish divergence has formed (yellow dotted lines on price and RSI) indicating a potential reversal.
However, what I find especially interesting is how well the support from the top of the previous descending channel (red dashed lines) has held as well during the brief trend line break. Then, as I move this line upward, it looks now to potentially be resistance (red dotted line), although time a few more touches on this line would be nice for confirmation. This has now formed what looks to be a downward channel that could potentially head to 54.5K over the week.
There is still quite a bit of time needed for confirmation, but the reason I really like this is that it jives so well with the upward trend bitcoin has seen on the daily chart. This trend then gives the potential for an inverse head and shoulders pattern, it gives the potential for a bounce off the upward trend line (white line), and it gives momentum upward as it would express a break from the bear flag I described yesterday by then create a bull flag downward.
Maybe I am too lost with the possibilities that the patterns are aligning with this change, but it would be interesting if there is a head downward for a few days then bounce upward. Curious if others see an error in my reasoning (as of course there are still countless other possibilities) as well as any other validation that I am just blatantly missing. If so, please drop a comment as I would love to discuss.
However, what I find especially interesting is how well the support from the top of the previous descending channel (red dashed lines) has held as well during the brief trend line break. Then, as I move this line upward, it looks now to potentially be resistance (red dotted line), although time a few more touches on this line would be nice for confirmation. This has now formed what looks to be a downward channel that could potentially head to 54.5K over the week.
There is still quite a bit of time needed for confirmation, but the reason I really like this is that it jives so well with the upward trend bitcoin has seen on the daily chart. This trend then gives the potential for an inverse head and shoulders pattern, it gives the potential for a bounce off the upward trend line (white line), and it gives momentum upward as it would express a break from the bear flag I described yesterday by then create a bull flag downward.
Maybe I am too lost with the possibilities that the patterns are aligning with this change, but it would be interesting if there is a head downward for a few days then bounce upward. Curious if others see an error in my reasoning (as of course there are still countless other possibilities) as well as any other validation that I am just blatantly missing. If so, please drop a comment as I would love to discuss.