BTC appears to be in a on the 4H TF, which is the lowest timeframe in which I would really respect such a formation with BTC . In my opinion, it would take a strong move to put us back at last year's yearly lows and I think we will at least see a move up to the top of the flag channel around 3800. I will also include an chat which indicates a larger rise toward 4200 is possible. As to the bounce off of the 3500 area, the following pattern chart also has the order block from just before the flag which should act as a support as well. The succeeding charts will show us how I mathematically determined a bounce off the 3500 area
The following chart shows how I mathematically determined the next drop to be between 3420 and 3520. I am guessing it will be much closer to 3500. progression is exponential, and the newest drop is 50% less than the prior drop . Even if this were linear, we would be seeing at most a 50% drop , which would mean roughly 3520. However the second drop was almost as long as the first drop and the third was only half as long. At this progression, we could argue that the 3rd drop would be 25% or even less than the second, but I have been conservative and calculated based on a linear progression since the first and second drops were very similar in length. This is why I have a stop at 3900. It's below the psychologically important 3400 and below the recent range low of 3420.
indicates a possible rise is coming out of the flag channel sometime soon. There has been a small bull cross on the H4 and the Tenkan Sen is getting closer to the Kijun Sen and threatening to cross over on the daily. Of course, this could be rejected. The H4 cross is a weak signal as it is below the Kumo cloud and the daily Kumo cloud interrupts a potentially upward thrust at around 4200. This is the reason that I will be diligent with stops while this plays out (if it plays out)
I use fibonacci for confluence and it's secondary to price action and market structure. In this case, we are currently bouncing at the .618 "golden ratio" which is at the top of an order block/demand zone as we can see from the chart below:
Furthermore: IG Client sentiment reports the following below (URL included):
"NET-LONG TRADERS DECREASE FROM LAST WEEK
Bitcoin: Retail trader data shows 76.9% of traders are net-long with the ratio of traders long to short at 3.32 to 1. The number of traders net-long is 2.2% lower than yesterday and 0.9% lower from last week, while the number of traders net-short is 1.9% lower than yesterday and 1.9% lower from last week.
BITCOIN DIRECTION REMAINS UNCLEAR
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Bitcoin trading bias."
The last time we were decreasing net long week over week and day over day and IG client bias was mixed, we ran from 3100 to 4200.
While I am ultimately more and I do see more downside, I think we are due for a relief leg whether that be to the top of our or to the top of the daily .
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