649bruno
Long

Update: BTCUSD (From Labor Day):Upside Breakout Building? Part 1

BITSTAMP:BTCUSD   Bitcoin / Dollar
326 7 6
I need two charts to explain-BTCUSD and its grind higher. This is a four hour chart.
If you are long, here are the positives:
1. Currently multiple buy Fractals (5 highlighted in green box).
2. The lower indicators under the chart are CHOP/ Chop Zone; readings below the shaded area (38.2) indicate a strong trend. The solid green indicates up.
Please note that the CHOP line has now moved below the shaded area. This indicates a stronger trend.
3. The top lower indicator is phase energy, and this is positive, very strong.
4. The alligator is feeding in the uptrend.
5. RSI / Stochastic (top indicator) is strong.
6. Prices are trading above the Ichimoku Cloud .
7. Prices are trading above the thick red Ichimoku Cloud conversion line. This is a support level.
8. Prices are trading above the Ki jun-Sen baseline of the Ichimoku Cloud and this has been HEADING HIGHER.
9. The 5/34 Momentum indicator (top middle) is strong. It's off the chart. The histogram within is rising. This is a positive divergence.
There are far more positives than negatives.

If you wish to exit or go short here is what to look for:
1. Sell Fractal;
2. Sinking (red in color) phase energy bars that approach the zero line;
3. The CHOP line (under chart) begins to rise away from the dotted line into the shaded area (this would suggest the end of the up-trend); or
4. The CHOP line heads lower out of the shaded area while the CHOP ZONE turns red. This would suggest a change in trend (down) that is strengthening.
5. The RSI/ Stochastic (top indicator) gets to 80, rolls over, and heads lower.
6. The 5/34 indicator (top middle) gets to near its top, rolls over, and heads lower.

Now, please go to the next-BTCUSD chart. It is daily. I will attempt to show you another (possible) upside breakout perspective. Don.
PRPS
2 months ago
I'm checking in each day with your charts, Don. Interesting stuff. So far they're doing ok. Do you imagine a bigger breakout being possible?
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649bruno PRPS
2 months ago
Thank you for your comments. I really appreciate them. When I see indicators building on a four hour chart, and I also detect a down-trend channel (please see part two of this series which is a daily chart), or a wedge, then I look to the CHOP indicator to tell me if the asset I am looking at is in a TREND, or in a zig-zag. BTCUSD on a daily chart is approaching a point BELOW the shaded area. This means the most important factor I use is (and this is extremely important) is the CHOP indicator to see if BTCUSD is in the shaded area or below the shaded area. If CHOP is back and forth inside that shaded area, I have a range bound asset. If it is below the shaded area, then there is a trend. Just think about this statement. If the indicators are improving, and the TREND IS GETTING STRONGER, and the price action is approaching a trigger point (the down trend channel's top line), doesn't it stand to reason that those that are short will throw in the towel and cover? This is why the prices jump.
Now, the condition are right for this perfect storm. But just as dark clouds on the horizon do not guarantee a thunderstorm, the conditions are right for the event, correct?
If I see a buy Fractal on the daily chart then the conditions for an upside breakout would all be there. Good luck to you. Don.
+1 Reply
oldstout
2 months ago
I see good charts. Thanks!
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Crypto.888
2 months ago
Thank you, Don.
Reply
649bruno Crypto.888
2 months ago
Crypto.888, thank you. You are too kind. Don.
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AndersonX
2 months ago
Thank you Don. Can you explain your reasoning on the Ki jun-Sen baseline being a bullish indicator when price is heading higher? Based on some other traders' reasoning I deducted this as a c-clamp formation and therefore a bearish indicator. thanks for the help!
Reply
649bruno AndersonX
2 months ago
The Ichimoku Cloud Conversion Line (red) is the fastest and most sensitive line. It follows price action the closest. The Base Line (black) trails the faster Conversion Line, but follows price action very well. The relationship between the Conversion Line and Base Line is similar to the relationship between a 9-day moving average and 26-day moving average.
Bullish Signals: Price moves above Cloud (trend), Price Moves above the black Base Line (momentum), Conversion Line moves above Base Line (momentum). It can also be noted here that both the conversion line and base line can act as support or entry triggers.
Bearish Signals: Price moves below Cloud (trend), Price Moves below black Base Line (momentum), Conversion Line moves below Base Line (momentum). It can also be noted here that both the conversion line and base line can act as resistance or exit triggers.
I use the cloud along with CHOP, CHOP ZONE, and buy and sell Fractals. When I see a valid buy or sell Fractal I look at compass number one for direction, the alligator jaw for feeding (up of down). I then look at compass number two, the Ichimoku Cloud for direction of cloud, direction of baseline, and direction of conversion line. For example, if I see a buy Fractal, and the CHOP is below the shaded area, and the CHOP ZONE is green, and the price action is above the black cloud baseline, and the black baseline is rising….these are all very bullish formations.
One key thing to remember is that you first have to establish trend. If CHOP is in the shaded area the asset/ stock is in a RANGE and not a TREND.
If the asset/ stock is RANGING, my indicators and the Ichimoku Cloud do not forecast very well. I won't consider making a trade until I see a valid buy/ sell Fractal and, at the same time, CHOP under the shaded area (38.2), or CHOP headed sharply down and soon to be under the shaded area. Look to charts of many time horizons to fine tune your efforts. (a 30 minute chart can confirm a 4 hour chart that takes longer to move). I hope this helps. Don.
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