Thanks again for taking the time to read this analysis.
I wanted to post a comparison of this past month’s movement to a similar movement seen through April-May 2019.
Many people have become again, with shorts spiking up the last week confirming this, and I don’t blame them! We are hitting the top of this channel, as well as the 0.382 fib retracement from the 2019 bottom up to the all-time high. Additionally, we are seeing a big divergence on on the daily time frame.
Normally, I would call this an easy short but right now I am a little skeptical because we have seen how Bitcoin has been this year and more often than not, the obvious trade setups are the ones that fail.
When we look to the left hand side of my chart, you can see there was a from beginning of April to beginning of May. As we got to the top of the channel for the third time, there was a massive divergence on daily time frame. Of course, circumstances were a bit different then because the logic in shorting there was also due to the fact that price was approaching 6k as resistance which was a massive throughout all of 2018. But what happened? Price just blew right through it and wiped out the divergence like it never even mattered.
Looking to the right side at current prices, we see that from mid-May to present time the price has also been following inside a .
The price movements and within the channel have also been very similar and I marked them #1-5 to visualize this.
There is also a divergence on daily time frame like we saw a couple months back.
Now I attached a green support box on the right because this needs to hold in order for this idea to be valid.
If price closes below that box with high , then we can just scrap this idea altogether. Just like back in April-May 2019, I drew a fib from #3 wave up to #4, and back then we saw the price was able to bounce between the 0.618 and 0.786 range before moving up. Price also never pierced below the #2 wave then, and so currently we do not want to see price break and close below $8,700 as I mentioned in my last idea’s update.
I understand this is a very risky spot to be and I am definitely not encouraging anyone to buy here! As my followers know, I placed long orders at $7,800 and $8,100 so I am still in a good position.
I did secure some small profits yesterday but I plan on holding on as long as that $8,700 does not break with a candle close below it. Only then will I close out my long positions.
If price does manage to break out to the upside of the channel, I will be watching for any potential reversal points ahead, but I do not currently have an exact target in mind.
Thanks again for reading, and if you found this idea useful please give it a thumbs up!
Also, click play above on main chart. You see price broke out of that channel, but we need that candle to close outside of the channel and there's still 13 hours until the candle closes. Just something to keep your eye on
We are now seeing profit taking here which is to be expected. I don't think we will get a big dump from here just yet but let's keep an eye because we are approaching some major resistances
Shorts continue to climb despite all this upward movement. We saw a similar thing happening when price broke out 6k up toward $8,300, where shorts continued to climb. Only on May 10th did the shorts finally start to drop. So if we see this play out the same way, then we should expect Bitcoin to see higher prices until shorts finally start closing. Keep a close on this over the upcoming days!