I've noticed as of lately everyone is getting super bullish and calling for new highs so i thought i might present you with a bearish scenario. Though i am long term bullish on bitcoin i think we might now be overdue for another pullback!
On the daily time frame we have just experienced a bit of a pullback in the face of a market structure top and Divergences on MACD and RSI followed by the relief rally that we are experiencing now . A divergence is simply the momentum oscillators making lower highs while the price continues to move higher. This shows us that a move is losing momentum and the move may soon be coming to and end. Our divergences on the MACD and RSI still have not fully played out so i cant get too bullish in the face of that. Markets never move in a straight line so this move up could very easily be a short squeeze. Observing The NVT we see that it has been very accurate in predicting pullbacks. Historically, when the NVT has flashed red we soon experience a dump of 18 - 70 %. our NVT indicator has been embedded in the red zone and we finally experienced a dump of 17% . Now that dump could have been it, but that would have made it one of the smallest dumps that the NVT predicted and in the face of market structure and Divergence i would expect larger. on top of that the NVT is back in the red which tells me we should expect another dump. THat being said NVT can stay red for a long time before dumping so we should drill down to the lower time
frames to get an idea of timing
Currently we are observing Divergences on the the hourly and 4 hour chart. Drilling down to the hourly you can see we have a triple bear divergence on the macd forming but still unconfirmed. On the RSI we have a double bear divergence forming but unconfirmed. On the 4 hour we have another MACD divergence forming but unconfirmed. To confirm these divergences we would need to see some sell volume come in and print a big fat red candle. Confirming the hourly and 4 hour divergences would likely spell and end to this move and would drive us down to complete the head and shoulders that we see on the daily chart. A likely area for reversal and for some sell volume to come in would be the 8460 area where we see major resistance confluence. The 8460 area marks the top of the bearish wedge we are forming. rejection of the top of the wedge followed by a break of the bottom of the wedge would be very bearish. In the 8460 area we will also be running into the 61.8 fib of our current range . The 61.8 fib has caused many reversals in bitcoin in the past so i would expect it to put up a fight this time. finally we also have the end of a smaller AC=CB pattern that will have many people taking profits at this level. All this being said, anywhere around the 8460 area seems like a fair spot for a violent reversal.
BUT, don't jump the gun because market still hasn't broke down yet and is showing a lot of strength by continuing to push higher in the face of this bear divergence. So we shouldn't be stepping in front of this train unless we start to see some bear volume come in. If we don't break down around the 8460 area, i could see the market going parabolic and possibly breaking the 9100 area so its definitely not a good idea to blindly short until we get some confirmed divergences and market structure. Like i said earlier, NVT can sometimes stay red for a while , so we might just see the market go back up , break the 9100 highs , oscillate around the 38.2 of our larger range (9400) then proceed to give us our dump. That would also be typical crypto, print a daily sell signal to pull the bears in, pull back to get everyone bearish, then rally to new highs to break the bears' hearts, then dump to break the bulls' hearts. At the moment this scenario is less likely in my opinion seeing what we have going on in the hourly and 4 hour charts but we shall see how it plays out.
Those are my two guesses about what will happen. In the long term i am still bullish bitcoin but do think we need a little more pullback. Currently i'm leaning to the scenario where we break at 8460 , but i'm no professional , just a dude with an opinion.
Disclaimer: This is simply my opinion and is not investment advice !
On the daily time frame we have just experienced a bit of a pullback in the face of a market structure top and Divergences on MACD and RSI followed by the relief rally that we are experiencing now . A divergence is simply the momentum oscillators making lower highs while the price continues to move higher. This shows us that a move is losing momentum and the move may soon be coming to and end. Our divergences on the MACD and RSI still have not fully played out so i cant get too bullish in the face of that. Markets never move in a straight line so this move up could very easily be a short squeeze. Observing The NVT we see that it has been very accurate in predicting pullbacks. Historically, when the NVT has flashed red we soon experience a dump of 18 - 70 %. our NVT indicator has been embedded in the red zone and we finally experienced a dump of 17% . Now that dump could have been it, but that would have made it one of the smallest dumps that the NVT predicted and in the face of market structure and Divergence i would expect larger. on top of that the NVT is back in the red which tells me we should expect another dump. THat being said NVT can stay red for a long time before dumping so we should drill down to the lower time
Currently we are observing Divergences on the the hourly and 4 hour chart. Drilling down to the hourly you can see we have a triple bear divergence on the macd forming but still unconfirmed. On the RSI we have a double bear divergence forming but unconfirmed. On the 4 hour we have another MACD divergence forming but unconfirmed. To confirm these divergences we would need to see some sell volume come in and print a big fat red candle. Confirming the hourly and 4 hour divergences would likely spell and end to this move and would drive us down to complete the head and shoulders that we see on the daily chart. A likely area for reversal and for some sell volume to come in would be the 8460 area where we see major resistance confluence. The 8460 area marks the top of the bearish wedge we are forming. rejection of the top of the wedge followed by a break of the bottom of the wedge would be very bearish. In the 8460 area we will also be running into the 61.8 fib of our current range . The 61.8 fib has caused many reversals in bitcoin in the past so i would expect it to put up a fight this time. finally we also have the end of a smaller AC=CB pattern that will have many people taking profits at this level. All this being said, anywhere around the 8460 area seems like a fair spot for a violent reversal.
BUT, don't jump the gun because market still hasn't broke down yet and is showing a lot of strength by continuing to push higher in the face of this bear divergence. So we shouldn't be stepping in front of this train unless we start to see some bear volume come in. If we don't break down around the 8460 area, i could see the market going parabolic and possibly breaking the 9100 area so its definitely not a good idea to blindly short until we get some confirmed divergences and market structure. Like i said earlier, NVT can sometimes stay red for a while , so we might just see the market go back up , break the 9100 highs , oscillate around the 38.2 of our larger range (9400) then proceed to give us our dump. That would also be typical crypto, print a daily sell signal to pull the bears in, pull back to get everyone bearish, then rally to new highs to break the bears' hearts, then dump to break the bulls' hearts. At the moment this scenario is less likely in my opinion seeing what we have going on in the hourly and 4 hour charts but we shall see how it plays out.
Those are my two guesses about what will happen. In the long term i am still bullish bitcoin but do think we need a little more pullback. Currently i'm leaning to the scenario where we break at 8460 , but i'm no professional , just a dude with an opinion.
Disclaimer: This is simply my opinion and is not investment advice !