I thought I would try another one after publishing an idea on the 4H timeframe, this time I looked at the daily for BTC. I do not trade Bitcoin and do this as a mental exercise, using the same tools / methods I use for trading Forex. You can find the link to the 4H chart under Related Ideas.
The currency traded inside a bearish parallel channel for 286 days, before breaking to the upside on March 3rd. After this breakout it failed to breach the 500 retracement of the swing low that started at November 13th last year and started trading inside a new, this time much narrower bearish channel. Zooming out a bit reveals price actually entered a period of consolidation represented by a descending triangle with the horizontal support at the 210 handle. This level coincides with the daily support I plotted in the 4H chart. Price is nearing the apex, which means a break out is due. Descending triangles at the back of a downtrend have the tendency to break to the downside, but I like to see evidence of price action before coming to a conclusion so I take both possibilities into account.
All in all I do not see an imminent trade, but with a break out of the triangle there would be two possibilities:
The currency traded inside a bearish parallel channel for 286 days, before breaking to the upside on March 3rd. After this breakout it failed to breach the 500 retracement of the swing low that started at November 13th last year and started trading inside a new, this time much narrower bearish channel. Zooming out a bit reveals price actually entered a period of consolidation represented by a descending triangle with the horizontal support at the 210 handle. This level coincides with the daily support I plotted in the 4H chart. Price is nearing the apex, which means a break out is due. Descending triangles at the back of a downtrend have the tendency to break to the downside, but I like to see evidence of price action before coming to a conclusion so I take both possibilities into account.
All in all I do not see an imminent trade, but with a break out of the triangle there would be two possibilities:
- With a break below and close below the support level there is a short opportunity. For a target I would look to the low of January 13th near the 150 handle
- With a break above and close above the upper trend line of the triangle there is a long opportunity. For the target I would extend the height of the range within the triangle in the direction of the breakout which would have confluence with the prior mentioned 500 retracement level at the 301 handle
You don´t need to be a weatherman to know which way the wind blows - B. Dylan
