Bitcoin's short-lived Christmas joy

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Morning traders!

I mentioned in the last update of my previous post that we were potentially forming an inverse H&S and that we needed to watch the wedge resistance, $3600 and volume because if we broke above the wedge , we would probably break above the H&S neckline. Well we broke through wedge resistance with volume and the H&S played out, although we never needed the full 38.2 fib retracement to form the right shoulder and give it juice.

My target remains around $3900 but I'll be reducing this slightly from my previous $3950 target because of 2 converging trendlines which I believe will guide Bitcoin towards it's ultimate launchpad as we drop lower into the channel we have been printing. The converging support trend line starts from our Q3 swing low and support fits snug with our recent trending support which has been holding since 25 November. The converging resistance trend line starts from our 15 October swing high and acted as support for our 15 November swing low when were still above $5k.

MFI , MACD , RSI etc are all overbought on the higher time frames and selling volume is drying up slowly so expecting strong resistance around $3900. We should also find resistance at our daily SMA30 which is very close.

Our temporary bottom target does change slightly with the recent upwards correction. If you look at our drop from $5658 to our channel support $3473, you will see that we had a 38.2 fib retracement on the following leg up to channel resistance which gives us a 138.2 Fibonacci extension target of $2640. On the next drop from channel resistance around $4409 to our 14 December recent swing low ($3122), we again should have a 38.2 fib retracement (not sure it will reach 50 fib) which again gives us a 138.2 Fibonacci extension target of $2630.

I think we should reach this target before finding a temporary bottom since these fib extension targets correlate so well.

I think once we reach $2630/ 40 , we should have a break from the converging apex and a strong move above the descending channel to the upside. I think we still need one last big move down so that the RSI will print a larger bullish divergence .

Good luck and happy trading!

Previous update's inverse H&S:

Previous post:

Comment: If you look at Binance, we're already at channel and converging trendline resistance. It will be interesting to see if we drop from here or $3900 (on Bitstamp).

Comment: We have bearish divergence right up to the 4H MFI and StochRSI signalling a weakness in trend as we approach our reversal target.

Comment: Target reached at $3924 then strong rejection as expected. We still have strong bearish divergence on the 2H, 3H and 4H MFI so expecting a strong correction, potentially a 61.8 fib retracement to around $3428.

Comment: New update:


I think the 200-ma on the weekly chart gave good support, but more importantly right below the 200-ma on the weekly, the 20-ma on the monthly is present around $2950, I really don't see that level breaking down. Imho it will hold.
Corn_Reaper UnknownUnicorn3272583
@rakeshm90, it’s possible but also possible that we dip below the weekly SMA200 before closing above it again. The monthly SMA20 may not be broken this time but the $3k will probably need to be tested again before the bottom is truly in.
This is a great analysis I love where you head is at. But this bounce has been very strong we should appreciate the potential that we break above the resistance of your trend channel
Corn_Reaper TheCryptAlpha
@TheCryptAlpha, thank you, it’s definitely a possibility however I don’t feel it’s likely that we break through resistance just yet unless we have another short squeeze since shorts are beginning to stack up again. Can definitely appreciate another leg up but I don’t think it will be happening this week unless the dollar index continues to depreciate.
thanks for sharing!
Corn_Reaper daniele.befera
@daniele.befera, you're welcome :)
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