Potential Bat Harmonic setting up on BTCUSD

Bitcoin looks to be in the process of setting up a bullish bat harmonic pattern. Please be aware this pattern has not completed yet and you should wait for reversal signals in the Potential Reversal Zone (PRZ) before entering this trade.

Looking at the chart, we can see the PRZ is between 7,300 and 7,425 and this zone has been highlighted in red on the chart
The PRZ is deteremined by a confluence of the following measurements:

- The 88.6% retracement of XA leg (where Point D is)
- The 1.272AB=CD movement level
- The 200% BC inversion level

When price reaches this zone, look for bullish signals and trade accordingly.


If pattern completes, look to take profit at both green target levels at the 0.382 and 0.618 retracements of the AD leg:

• The first target (.382) intersects the R1 resistance line which is a major trend line drawn from 11.7k reaction high to the 10k reaction high.
  
• The second target (0.618) is in line with the red 0.382 fibonacci retracement of 5.7k up to the 11.7k high.
  

The black fibonacci retracement was drawn from 5.7k up to the 10k high, which I included on the chart for additional support/resistance levels.

I have also included the S1 support line which is a major trend line drawn from 5.4k (Nov '17) to 6k (Feb '18) to 6.4k (April '18).


- Stop loss for this trade is shown in solid red at the 1.13 extension of XA


Thanks for taking the time to read this idea, and please give it a thumbs up if you found it useful!!

Comment:

We got another drop yesterday right after I posted this and the price is now ranging in the PRZ. Things still look very bearish so do not take this trade yet until we get reversal signals. The price already reached the 200% BC inversion level but wasn’t able to break it, so this is at least one positive sign that it didn’t immediately break down below the PRZ.
I want to make it clear that I am still long-term and med-term bearish. Looking at the price structure alone it would make sense for price to drop after consolidation to mirror the price action on the left side during the bull rally a couple weeks ago. For the short-term I am still leaning bearish, but again if we see some signs of reversal then this bat harmonic will be in play and give us a short-term bull scenario.

Comment:

Got a little jump just now but price once again is being held down by the 50MA on the hourly (in orange). However I also noticed a bullish divergence on the hourly time frame. These mixed signals make it hard to know when to enter. My original plan was to let the price consolidate over the next few days (price action typically slow over weekend without major big moves) and wait for stronger signals to emerge. However I’m now considering opening a small position on this small retrace and adding more later if I get the signals I’m looking for.

Comment:

Things aren't looking great, price already fell below Point X though technically we haven't broken below the stop loss level. I haven't entered this trade yet, was considering it yesterday but thought it'd be better to remain patient.
We could possibly see the price move up from here as price hit both the 0.236 fib retrace (in red) and the 200MA on the 4hr time frame. These should act as pretty strong supports but if they both break, then the price is going to simply mirror the entire left side of this structure (daily view) and fall all the way back down towards 6,700 and below

Trade closed manually:

Unfortunately we never got any reversal signals to go long from the PRZ and as a result price broke down and fell below stop loss level. This is why it is so important to wait for the right setup to develop before trading the harmonic pattern on its own