Happy new year Traders! First chart for 2019 and back in the saddle after time away (and not too much has been missed it seems).
My trade from my previous post is still active and I'm still waiting for a retracement to our $2630/40 bottom target.
Bitcoin has now broken support of the large bearish pennant which has been holding since our annual low in mid December. On the lower time frames we also have another bearish pennant in play and price is sitting right at our 1D SMA50 resistance (SMA300 on 4H) which is holding strong.
This SMA50 resistance along with declining volume and 2 bearish pennants , indicates that the most likely path is to the downside, which will invalidate that inverse H&S which everyone has been waiting for. Price action is also looking bearish on the daily and weekly charts.
My initial target for the larger pennant is about the height of the pennant which works out to at least a 29.2% drop from the pennant support. Also, 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 wave up to channel resistance which gives us a 138.2 Fibonacci extension target of $2640, which also coincides with a 138.2 fib extension ($2630) from the height of the larger pennant on the next wave down from $4409.
Looking at our 1D SMA200 (4H SMA1200) resistance, it looks like this might potentially be a large parallel channel with resistance from the swing high on 15 October, and which had a retest of its support on 15 December after an initial test on 7 December. If this is the case, then I suspect we will potentially find the $2630/40 support sometime at the end of Jan in the form of a v-shaped swing low, or in the first week of Feb before potentially attempting another test of the 1D SMA50 again.
Good luck and happy trading!
Previous chart:
My trade from my previous post is still active and I'm still waiting for a retracement to our $2630/40 bottom target.
Bitcoin has now broken support of the large bearish pennant which has been holding since our annual low in mid December. On the lower time frames we also have another bearish pennant in play and price is sitting right at our 1D SMA50 resistance (SMA300 on 4H) which is holding strong.
This SMA50 resistance along with declining volume and 2 bearish pennants , indicates that the most likely path is to the downside, which will invalidate that inverse H&S which everyone has been waiting for. Price action is also looking bearish on the daily and weekly charts.
My initial target for the larger pennant is about the height of the pennant which works out to at least a 29.2% drop from the pennant support. Also, 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 wave up to channel resistance which gives us a 138.2 Fibonacci extension target of $2640, which also coincides with a 138.2 fib extension ($2630) from the height of the larger pennant on the next wave down from $4409.
Looking at our 1D SMA200 (4H SMA1200) resistance, it looks like this might potentially be a large parallel channel with resistance from the swing high on 15 October, and which had a retest of its support on 15 December after an initial test on 7 December. If this is the case, then I suspect we will potentially find the $2630/40 support sometime at the end of Jan in the form of a v-shaped swing low, or in the first week of Feb before potentially attempting another test of the 1D SMA50 again.
Good luck and happy trading!
Previous chart:
Comment:
Hidden bearish divergence on 4H MFI
Comment:
Decent squeeze to the upside yesterday on low volume however I'm not convinced until we have broken above the larger triangle resistance and get over $4200 to set a higher high. Open interest is growing on Bitfinex with shorts dropping off at a rapid rate and with a simultaneous increase in the number of long positions. Makes sense for this bull trap to trap these longs with a long squeeze for the big drop.
Comment:
Forgot to mention the bearish divergence which has formed on the 1D MFI so money flow is telling us a different story.
Comment:
This illustrates the bearish divergence forming on the 3D StochRSi, MFI and RSI. We have strong hidden bearish divergence currently forming on the StochRSI (unless we see price move above $6544, which is unrealistic for now imo). We also have weaker bearish divergence on the Money Flow Index, either of which should play out over the next couple of weeks, but for the short term we also have medium strength bearish divergence on the RSI as you can see by the blue trendlines so potential for a drop within the next few days if this plays out.
