Bitcoin is setting up a perfect bat harmonic pattern at an area of high resistance.
After breaking the 6,800, BTC is now touching the bottom of an important trend line (in black) that is drawn along all reaction lows from 5.4k (Nov ’17) to 6k (Feb ’18) to the lows in early April.
This trend line was broken in early June and this whole move up is a re-test of that support trend line as resistance.
The 400MA (purple) on the daily TF is also following this trend line perfectly and providing additional resistance.
Also, when we draw a Fib retracement from the all-time high of $19,800 all the way down to $0.00, we can see the price has come back up to the 0.618 level and this is obviously a very important fib level that spans the entire price range of Bitcoin.
Taking a look at the Harmonic Pattern, we see the Price Reversal Zone is formed by a confluence of the 200% BC Inversion level, the 127.2% AB=CD level, and the 88.6% retrace of XA.
Targets for the harmonic pattern are shown in green, with 1st target at the .382 retrace of AD leg, and the 2nd target at the .618 retrace of the AD leg.
Stop loss level is a the 1.13 extension of XA leg.
If price reaches 1st target, close half of your position and move stop loss down to break-even.
This short call does not predict a mid-term or long-term price movement for Bitcoin. It is just a short-term drop, and logically it makes sense to see Bitcoin re-test that 6,800 range as support which is where the first target of this harmonic pattern lies.
Thanks for taking the time to read this analysis, if you found it useful please give it a thumbs up!
After breaking the 6,800, BTC is now touching the bottom of an important trend line (in black) that is drawn along all reaction lows from 5.4k (Nov ’17) to 6k (Feb ’18) to the lows in early April.
This trend line was broken in early June and this whole move up is a re-test of that support trend line as resistance.
The 400MA (purple) on the daily TF is also following this trend line perfectly and providing additional resistance.
Also, when we draw a Fib retracement from the all-time high of $19,800 all the way down to $0.00, we can see the price has come back up to the 0.618 level and this is obviously a very important fib level that spans the entire price range of Bitcoin.
Taking a look at the Harmonic Pattern, we see the Price Reversal Zone is formed by a confluence of the 200% BC Inversion level, the 127.2% AB=CD level, and the 88.6% retrace of XA.
Targets for the harmonic pattern are shown in green, with 1st target at the .382 retrace of AD leg, and the 2nd target at the .618 retrace of the AD leg.
Stop loss level is a the 1.13 extension of XA leg.
If price reaches 1st target, close half of your position and move stop loss down to break-even.
This short call does not predict a mid-term or long-term price movement for Bitcoin. It is just a short-term drop, and logically it makes sense to see Bitcoin re-test that 6,800 range as support which is where the first target of this harmonic pattern lies.
Thanks for taking the time to read this analysis, if you found it useful please give it a thumbs up!
Comment:
Here's a zoomed-out look of the resistances Bitcoin currently faces:
Comment:
4hr Divergence on the RSI and CMF
Trade active
Comment:
Seems like we have a broadening top pattern on the 4hr. Typically we would see this breakout to the upside but this pattern is generally not a great performer, and it could end up following this Elliott wave pattern.
Comment:
So the price ended up breaking out of the broadening top, hit a high of 7.8k and retraced a bit. There is some big volume on those last green candles. However, this pattern is still in play despite the fact that we have exceeded Point D.
Remember, the stop loss for this trade is at the 113% extension of XA (around 8k). This happens to intersect with the descending trend line in black which is drawn from 11.7k high down to the 10k high. This is the most likely spot for price to end up finding more resistance.
Something worth noting right now is the appearance of several divergences. The CMF, RSI, and MACD on the 6hr time frame are showing bearish divergences. Obviously a jump in price can move this oscillators up and remove the divergence, so this doesn’t mean we will drop right now but be aware that this could happen soon.
I believe the real drop will happen around 8k-8.1k where the stop loss is positioned for this harmonic pattern. Using the volume profile tool, you can see from November 2017 onwards, that 8k-8.1k region has the highest trading volume and I expect price to find resistance there along with the descending trend line.
Remember, the stop loss for this trade is at the 113% extension of XA (around 8k). This happens to intersect with the descending trend line in black which is drawn from 11.7k high down to the 10k high. This is the most likely spot for price to end up finding more resistance.
Something worth noting right now is the appearance of several divergences. The CMF, RSI, and MACD on the 6hr time frame are showing bearish divergences. Obviously a jump in price can move this oscillators up and remove the divergence, so this doesn’t mean we will drop right now but be aware that this could happen soon.
I believe the real drop will happen around 8k-8.1k where the stop loss is positioned for this harmonic pattern. Using the volume profile tool, you can see from November 2017 onwards, that 8k-8.1k region has the highest trading volume and I expect price to find resistance there along with the descending trend line.
Trade closed: stop reached:
Huge bullish impulse today, stop loss hit unfortunately! Luckily I only had a small position with the risk:reward being so low. Price is hitting a strong resistance now so we may see a small retrace today. I'll try to get a new chart up soon!