BTC Struggles To Hold 50 Week MA & Recover Above H&S Neckline!
I've recently shown why there is a high probability of BTC falling to 3000 or lower, based on technical developments on the chart. That's what the big picture suggests right now, but that doesn't necessarily mean that it will happen. As analysts, when we identify the most likely longer-term trajectory (such as the one described above) we have to constantly monitor the developments along the way — especially with something as volatile as BTC.
Currently, BTC is contending with two very important chart features; the 50 week moving average (in orange) and the neckline of a large head and shoulders formation (red horizontal trendline.)
Looking first at the 50 week moving average (in orange,) you can see that BTC first closed below it last Sunday. Since then, price has failed to close back above it. So, there is clearly some weakness here in BTC's attempt to hold the 50 week moving average. It's actually failing to hold, because we haven't closed any daily candles above it. With that said, price IS above it right now. However, if we continue to close daily candles below it, the likelihood is that price will continue to fall.
The other cart feature that BTC is battling right now is the neckline of the head and shoulders pattern. You can see that it has actually been strong resistance for BTC — stopping all rally attempts above the 50 week MA dead in their tracks. So, this is actually pretty bearish price action. You can see that price is basically in a bearish consolidation, after a precipitous fall, in a way that resembles a sloppy bear flag.
It isn't all bad though. BTC is currently holding the bottom of a falling wedge (black dashes) which currently corresponds with the bottom of the lows through the head and shoulders pattern. That falling wedge is actually a BULLISH pattern. Falling wedges generally produce upside breakouts. So, an upside breakout is still a possibility that needs to be monitored until the falling wedge is broken. As a side note, the center-line of the weekly Gaussian Channel is also being held by BTC (not pictured in this analysis.)
So, we have a very clear area that is being contested right now. We have the 50 week MA, the middle of Gaussian Channel, the falling wedge, and the neckline of the head and shoulders pattern. I'm sure there are plenty of people saying that BTC is about to enter a bull run and blah blah blah, but I need to see evidence. If BTC can show me a confirmation above the neckline of the head and shoulders, then the target will be the top of the falling wedge. If that doesn't happen, the downtrend will continue.
Speaking of downtrends, WE ARE IN ONE! Ever since the high of 13,800, BTC has been forming lower highs and lower lows. In a downtrend like this, it isn't wise to try to buy the dips. Sure, you may get some upside, but you don't know how limited that upside will be. THE TREND IS YOUR FRIEND! Trying to buy lows in a downtrend is betting AGAINST the trend. And that isn't generally a recipe for long-term trading success.
With that said, the bears remain in control, and the will continue to remain in control, even if we see a rally to 9000. Lower highs don't change the market trend. For that to happen, BTC could need to close above 10600. That is always possible, but very unlikely right now. For educational purposes only, selling the rallies is a better strategy than buying the dips, when the market is in a clear downtrend like this. Until the trend changes, it's always wise to trade with it.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Currently, BTC is contending with two very important chart features; the 50 week moving average (in orange) and the neckline of a large head and shoulders formation (red horizontal trendline.)
Looking first at the 50 week moving average (in orange,) you can see that BTC first closed below it last Sunday. Since then, price has failed to close back above it. So, there is clearly some weakness here in BTC's attempt to hold the 50 week moving average. It's actually failing to hold, because we haven't closed any daily candles above it. With that said, price IS above it right now. However, if we continue to close daily candles below it, the likelihood is that price will continue to fall.
The other cart feature that BTC is battling right now is the neckline of the head and shoulders pattern. You can see that it has actually been strong resistance for BTC — stopping all rally attempts above the 50 week MA dead in their tracks. So, this is actually pretty bearish price action. You can see that price is basically in a bearish consolidation, after a precipitous fall, in a way that resembles a sloppy bear flag.
It isn't all bad though. BTC is currently holding the bottom of a falling wedge (black dashes) which currently corresponds with the bottom of the lows through the head and shoulders pattern. That falling wedge is actually a BULLISH pattern. Falling wedges generally produce upside breakouts. So, an upside breakout is still a possibility that needs to be monitored until the falling wedge is broken. As a side note, the center-line of the weekly Gaussian Channel is also being held by BTC (not pictured in this analysis.)
So, we have a very clear area that is being contested right now. We have the 50 week MA, the middle of Gaussian Channel, the falling wedge, and the neckline of the head and shoulders pattern. I'm sure there are plenty of people saying that BTC is about to enter a bull run and blah blah blah, but I need to see evidence. If BTC can show me a confirmation above the neckline of the head and shoulders, then the target will be the top of the falling wedge. If that doesn't happen, the downtrend will continue.
Speaking of downtrends, WE ARE IN ONE! Ever since the high of 13,800, BTC has been forming lower highs and lower lows. In a downtrend like this, it isn't wise to try to buy the dips. Sure, you may get some upside, but you don't know how limited that upside will be. THE TREND IS YOUR FRIEND! Trying to buy lows in a downtrend is betting AGAINST the trend. And that isn't generally a recipe for long-term trading success.
With that said, the bears remain in control, and the will continue to remain in control, even if we see a rally to 9000. Lower highs don't change the market trend. For that to happen, BTC could need to close above 10600. That is always possible, but very unlikely right now. For educational purposes only, selling the rallies is a better strategy than buying the dips, when the market is in a clear downtrend like this. Until the trend changes, it's always wise to trade with it.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-