Finally there was some heavy profit taking that occurred right at the 0.618 retracement of $3,100 to ATH $19,900.
The volume is obviously very heavy and should lead to more downside in the upcoming days but the overall uptrend is still intact.
It’s too early to say if this is the exact end of the rally or if we will see another move up before the real drop begins.
Instead let’s look at what’s happening and be prepared for both scenarios.
Looking at the chart we can see price had a strong bounce off the 0.5 fib retrace of the final wave up (in blue), and off the rising blue trend line.
But still the volume is low and it’s looking more like a dead cat bounce than a continuation of overall trend.
With that said it’s very likely we continue to fall, but let’s just see how price reacts to that blue trend line if it gets there again because we could see a similar pattern to the price action from May 17th onwards.
If that blue trend line breaks then our next target range will be $9,200-$9,600. At that range we can see the bigger, more important rising trend line (black) which has held up price since end of April.
Additionally, we can see a confluence of 0.618 fib (blue) and 0.382 fib (black).
This 0.382 is a very important retracement level.
When we look back at 2015 we can see there was a significant retrace back down towards the 0.382 fib level before resuming the uptrend. If we do see more downside from here, this seems to be the most likely area for price to hold.
Another thing to note is how open short positions remain very high and have barely budged. Which can set up nicely for a short squeeze, especially if shorts start rising again.
The open long positions have sharply dropped over the last couple of days and this is most likely due to being stopped out from price falling. Both of these things keep the bulls in favor, even if we do drop to the 9k region.
In summary, watch price action around rising blue trend line. If that breaks, expect price to reach the support zone box (in green). This is where we could see a lot of buyers stepping in.
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The volume is obviously very heavy and should lead to more downside in the upcoming days but the overall uptrend is still intact.
It’s too early to say if this is the exact end of the rally or if we will see another move up before the real drop begins.
Instead let’s look at what’s happening and be prepared for both scenarios.
Looking at the chart we can see price had a strong bounce off the 0.5 fib retrace of the final wave up (in blue), and off the rising blue trend line.
But still the volume is low and it’s looking more like a dead cat bounce than a continuation of overall trend.
With that said it’s very likely we continue to fall, but let’s just see how price reacts to that blue trend line if it gets there again because we could see a similar pattern to the price action from May 17th onwards.
If that blue trend line breaks then our next target range will be $9,200-$9,600. At that range we can see the bigger, more important rising trend line (black) which has held up price since end of April.
Additionally, we can see a confluence of 0.618 fib (blue) and 0.382 fib (black).
This 0.382 is a very important retracement level.
When we look back at 2015 we can see there was a significant retrace back down towards the 0.382 fib level before resuming the uptrend. If we do see more downside from here, this seems to be the most likely area for price to hold.
Another thing to note is how open short positions remain very high and have barely budged. Which can set up nicely for a short squeeze, especially if shorts start rising again.
The open long positions have sharply dropped over the last couple of days and this is most likely due to being stopped out from price falling. Both of these things keep the bulls in favor, even if we do drop to the 9k region.
In summary, watch price action around rising blue trend line. If that breaks, expect price to reach the support zone box (in green). This is where we could see a lot of buyers stepping in.
If you liked this idea, please give it a thumbs up!
Comment:
Click play on chart. Price is quickly approaching the green support box area I have mentioned. On lower time frames you can already see some bouncing from the top of the box. I still think this will be a strong support zone, but price action so far is not suggesting a big reversal just yet. We will have to monitor price as it reaches this area and look for setups to go long.
Comment:
Getting a strong bounce already, but volume is still pretty low. I think it's likely we see price return to that support zone in the next day or 2. Ideally, I'd like to see some consolidation and multiple rejections/wicks in trying to break down support zone. With that I'm also looking for shift in momentum on the oscillators on 4hr or higher TFs (similar to what I saw happen back when price was bouncing off $7,500 and I called for long setups)
Comment:
Bulls are already so strong, and never got the support re-test, it simply bounced right from the top of my support zone. If price breaks this 11.5/11.6k range (0.5 fib) then I doubt we will get another shot at the green support range below. Let's see if price can break this zone now, otherwise I expect a drop back down to the 10.6k
Comment:
Looks like an ascending triangle is forming here.
If price breaks out the top of this triangle, we should see $12k
If price breaks out the top of this triangle, we should see $12k
Comment:
Ascending triangle failed, price broke support. I think it makes most sense to see price hit the 10.6-10.8k range and move back up if bulls really are back in control. Otherwise it will most likely re-test the lows set yesterday
Trade closed: target reached:
Price just touched the very top end of my support range in green and created a V-shaped bounce. This is where I had my second buy-in opportunity placed! My latest idea with inverse H&S is still in progress, yet to reach the target of that measured move, so please check there for any additional updates. Thank you for your support guys!