Bitcoin Tests Bottom of 6K Resistance Zone! Know These Facts!

COINBASE:BTCUSD   Bitcoin / U.S. Dollar
Hi friends! Welcome to this update analysis on Bitcoin! Let's get right to it! Looking at the daily chart , we can see that Bitcoin has rallied into the bottom of the major overhead resistance zone . In fact, the very bottom of that resistance zone is 5777 on the Coinbase chart. As you can see, BTC rallied into that, but is not currently surpassing it. So, there are several things that we have to understand right now, from a realistic technical perspective.

1. Bitcoin is running into MAJOR resistance, while being overbought, showing bearish divergences on many indicators, and flashing a red sell signal on the NVT .
2. Bitcoin is now well above the weekly 50 MA (in black.) However, this is kind of meaningless until we see a weekly candle actually close above the 50 MA. Bitcoin could easily fall back below the weekly 50 MA, and close the weekly candle below it. HOWEVER, if we do see a weekly candle close above the 50 EMA , that's actually a long-term buy signal, despite the fact that we are right here below major resistance.
3. THIS IS IMPORTANT TO UNDERSTAND*** I have readjusted the 61.8% Fibonacci retrace, since the high from April 23rd was surpassed. As you can see, the 61.8% retrace is now RIGHT on the peaks from December, January, and February. That tells me that this is probably the top. Because, if Bitcoin continues to rally significantly higher, it would also raise the 61.8% retrace.

As an experiment, I raised the top of the retrace to the 6817 level, which pretty much represents the top of the major overhead resistance zone . If Bitcoin were able to rally all the way up to there, it would raise the 61.8% fib into an insignificant area, but the 78.6 would then be in the inverted head and shoulders range (December to March.) That would result in a retrace setup that is less beautiful (so to speak) on the chart. I think the way the fib looks right now, is actually perfect, because the 61.8% retrace is catching all of the peaks from December to January. In other words, it makes the most sense, that this could be the top.

However, it's hard to call the top when the market starts to break out like this. Now that BTC has broken out above the head of this potential head and shoulders pattern, and broken out above the weekly 50 EMA (in black) it's hard to call. I still think the upside is extremely limited, and that a major pullback is coming in the near future. Just look to the left on the chart. You can see how long it took for BTC to break through the 6000 range support. Now, that range is resistance, and it's likely to reject Bitcoin multiple times over, before we actually surpass it.

I'm sure many of you are wondering what's up with the head and shoulders call. Well, technically a head and shoulders is invalidated if price action in the right shoulder rises above the head. However, I have seen many head and shoulders patterns that played out perfectly, with right shoulders higher than the head. I don't care what you read in books, there isn't a perfect symmetry that a head and shoulders has to have, to be classified as a head and shoulders . It simply has to consist of three peaks, with a clearly defined neckline support, which is later broken. That's it. I'm not concerned with the height of the peaks or the symmetry or any of that. I'm not saying that this is definitely a head and shoulders formation, but I'm watching it closely, in case it develops as one.

For example, look at the inverted head and shoulders at the bottom of the screen. The left shoulder is the deepest trough. The head is the second deepest, and the right shoulder is the shallowest trough. However, it played out perfectly well as an inverted head and shoulders pattern. Recognizing that, was one of the key things that helped me make the call that we were going to breakout to 5300, just before it happened. This current pattern could end up being similar, just to the downside instead.

On the four hour chart, I know that BTC has clearly been in an uptrend channel . The current candle has touched the top of the uptrend channel on the four hour chart, so that is added resistance as well.

In summary, people can say what they want and do what they want with their own investments. Personally, I don't like to buy ANYTHING into major resistance and sell signals. It's counter intuitive to being a technical analyst. When sell signals are all around, and markets are running into major resistance, that's generally when I take profits and look for the exits.

The volume is declining. There's a bearish divergence on the MACD . The RSI is back in overbought territory. There's a sell signal on the NVT . I could go on. Those are not conditions that I like to buy into.

Good luck trading everyone!

I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.

***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***

Comment: The bullish possibility...

The danger with TA is that traders would want their idea to be popular as it is also a way of manipulating the market to do what he / she predicts is going to happen. So all those that are still long, will post things about it possibly (however unlikely) push through the resistance etc. and those that sold and are hoping / banking on another low entry, will try their best to tell everyone it is going down. The more following, the more people may trade accordingly and in some margin help this whole scenario come true. Thats why the technicals work, as all those that understand it, pro actively make the technicals do what it is sopposed to do as they buy / sell accordingly. Strange world this...
Also, this market is heavily manipulated.... So which way would the manipulation go now? when everyone thinks it should be going down.... To push it up ? Or to "manipulate" it to do what everyone thinks it should do.... What would be the point of that....
All technicals show this and logic will prevail that we need to regroup and attack the resistance with more volume to break through. However, One thing I have learned is that it is very very very difficult to determine the "top" for BTC when it is bullish.... VERY few (Hardly any) could accurately indicate where the top was and always predicted corrections and BTC would do the opposite. (more often that not)
“I don’t care what you read in books”. Enough to stay away right there. Stay away!!
+3 Reply
Thanks Boss!!!
Thank you
Great TA, I see $7440 being met long term too. Thanks for sharing.
@MagicPoopCannon . First, I want to thank you for your continued, thorough, and largely accurate market analysis. It's nice to see a well-educated technician that knows how to properly use the TA tools. That said, as an avid Elliott Wave Theorist, I would say the height of the shoulders matter (when they exceed the head) simply because the wave count changes. I do believe your atypical H&S argument is valid, but I would definitely say the probabilities of the typical H&S setup remain higher. Anyways, thanks again for your diligence.
+3 Reply
earthling justybear1984
@justybear1984, thx for posting informative, educational conversation on Trading View- so refreshing to read dialog in a manner that helps support all of our TA education. I wish everyone would contribute in a similar manner.
"the probabilities of a typical H&S setup remain higher" - I agree.
nice one MPC ...

Shorting more at 6300 if it gets there.

Most likely it will because this asset class is a master of inflicting maximum pain on new entrants.
+1 Reply
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