tommyf1001
Long

Daily Bearish Divergence on BTC. Will it matter this time?

COINBASE:BTCUSD   Bitcoin / U.S. Dollar
Hi folks,
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 bearish 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 bearish divergence on RSI 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 bullish 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 rising channel 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 bearish 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 support area throughout all of 2018. But what happened? Price just blew right through it and wiped out the bearish 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 rising channel .
The price movements and volume within the channel have also been very similar and I marked them #1-5 to visualize this.
There is also a bearish 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 volume , 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 bullish 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!
Comment: Well you know you must be on the right track when Botje11 posts a new idea with this exact Bitcoin Fractal idea that I posted and asked about on his comments yesterday morning. Not sure if he saw my comment or not, but it is reassuring to see him agree with me. Anyways, it looks like there is an ascending triangle pattern on the 4 hour time frame. If this triangle holds, we should see a bullish breakout pretty soon!
Comment: Got the breakout on that ascending triangle pattern, just as I called for this morning. Now the target for this triangle is $9,850 so we should keep a close eye on that. The obvious major resistance level beyond that is $10k which everyone on TV is currently aiming for so it's possible we see a drop happen before that level is even reached just to go against the herd. But I am only speculating at this point, so we will have to simply see how price reacts at these levels before drawing conclusions.
Comment: Almost reached target of ascending triangle, be very careful when price reaches this level:
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
Comment: Target reached for ascending triangle
Comment: Target reached for ascending triangle.

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
Comment: What a big move this past weekend, the bulls are just so strong in this market. Now we see price has been consolidating a little bit in a symmetrical triangle. Symmetrical triangles breakout in the direction of the overall trend 75% of the time, so there is a high probability we see a breakout to my target.

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!
Comment: Another note on last update...we need to see price break $11k and close the candle outside the symmetrical triangle for bulls to be in favor.
Comment: Looks like it's breaking out now. Volume was decent on the last candle, but not great. Let's see how this next candle closes.
Comment: Harmonic pattern discovered, here are targets
Comment: Symmetrical triangle breakout still in play, almost at target
Comment: Symmetrical triangle target reached...and so much more
Comment: I think it's safe to say the bearish divergence did not matter once again ;)
Trade closed: target reached: Another winning trade setup! My longs are still active but this idea will be closed as it has succeeded

Comments

good call
+1 Reply
looks like a broadening wedge towards upside.
Reply
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