BTCUSD Trading Bias: Neutral - depending on which scenario gets triggered first.
Here we see RSI diverging quite strongly, suggesting a potential bounce off the support channel. However, we also see BTCUSD in a clear downtrend at the moment. This leads to 2 potential scenarios
If we break and close above the blue trendline then upside targets are in play.
If we break and close below the green support channel then downside targets are in play.
Trade active
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TP1 HIT
Trade active
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That bullish volume in the last couple hours of Friday trading was unexpected. It does not change my current outlook for these downside targets however. At least not yet. Some profit has been booked, and the remainder of this short play is trading risk free. The follow chart is a very speculative assumption of what may come next. The reason it is speculative is because the C point of the potential harmonic Bat has not yet been truly confirmed. If the C point is cemented and fixed, then the above scenario comes into play. Otherwise, the target will be reached. Before the bat completes, the remainder of my trade will be taken out at the entry point (move your stop loss!)
Trade closed: target reached
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Remainder of the trade has closed at the entry point.
Partial profits taken once more.
The next short play is still potentially viable depending on whether we reach the completion point of the Bat.
So its gonna go either up or down. Very insightful. In all seriousness tho you can't trust RSI divergence for cryptocurrencies atm. These sorts of thumb rules are violated frequently. I do agree we'll need to break that trend channel for upside but almost every breakout recently has failed to follow thru. THAT BEING SAID, I am looking for buy entries, tho moreso for other crypto assets. Happy hunting, my friend!
Price can go either up, down, or sideways. Please read the entire idea in the future to understand the conditional triggers that bring one set of targets into play or the other.
You can definitely make use of secondary indicators to gauge momentum. Does RSI oversold mean Bitcoin will go up? Of course not. It is simply one tool in the toolbox that you can use in confluence with other variables.
"These sorts of thumb rules are violated frequently" --> As stated above, RSI divergence is one tool... not a rule in and of itself.