Bitcoin to first retest our December low before wedge breakout

COINBASE:BTCUSD   Bitcoin / U.S. Dollar
Good day Traders

As much as everyone is hoping for a prompt breakout from this bullish wedge , I don't think this will be happening just yet. Not long to go but we'll most probably be retesting our December lows first before we have a strong break to the upside.

ADX & DI shows us that the momentum of this downtrend hasn't slowed down just yet. Looking at Bitstamp over the lower time frames, we still have bearish divergence in the very short term on the 1H StochRSI.

We had close to a 50 fib retracement after the drop from $3445, our recent swing high, so with a continuation of bearish momentum, we can expect a 138.2-161.8 fib extension of the same wave ($3256/$3284).

This target coincides with our weekly SMA200, where in the short term, we should have a long wick extension to between $3250 - $3290 before bouncing back above the weekly SMA200 support.

I suspect we'll then retest the wedge resistance, somewhere between $3350 - $3370 before dropping back below our weekly SMA200, closer to the apex of the wedge , before breaking out.

The most recent downtrend on the daily started when we dropped from $4100 in January, where we had a 38.2 fib retracement afterwards (almost 50 fib) to retest daily SMA50, giving us a 168.1 fib extension target of $3090.

The drop from our most recent swing high on 26 Jan, had a 38.2 fib retracement giving us a 161.8-178.6 fib extension target of $3140 - $3090. Since momentum hasn't slowed down just yet and we have 2 similar fib extension targets from the first and most recent downtrend wave of the same wedge , I suspect we will be retesting our December lows around $3100.

We have bullish divergence on our daily stochrsi which should complete once we've retested the oscillator uptrend support, before breaking out from this wedge resistance to our daily SMA50 and upper bollinger band resistance ($3640 - $3680).

Once we have broken above DMA50, I expect a strong move to DMA100, around $4300, where we have major horizontal resistance. This is also the 68.1 fib resistance level of our main drop on 19 November 2018 ($3565 to $3456). You can see that move in November forms the width of what seems to be a large descending parallel channel , although I doubt we'll be staying below it's resistance for too long.

Good luck and happy trading!

Bitstamp: ADX/DI and bullish divergence on daily stochrsi:

Bearish divergence on 1H and first target close to our weekly SMA200 (138.2-161.8 fib extension target after a 50 fib retracement):

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