This is how you read the momentum in the market
Bitcoin's price has shown us a huge spike to the upside for almost 2.8% from the opening price of the previous 4 hours candle. With this huge moves, once again it has invalidated the people's bias to claim lower. Even at this current condition the price is entering a huge resistance level, there isn't still any sign of the diminishing in the momentum yet. What is current huge momentum in the market? Let's see the explanation below.
First, the white region is the key level on the lower degree of this cycle. This key level has invalidated the previous potential of Head and shoulders pattern so far. After touching this level, the price has spiked up to almost $13600 region. Next thing we must see when we want to measure current momentum is to look at the oscillator indicators which usually provide a good valuation of current momentum in the market. I use the MACD and RSI which based on my experience mostly pretty accurate.
From the MACD perspective, you know that the histogram is ticking up and is now entering the positive side on the 4 hours chart. This kind of condition is showing up because the buying stack is bigger than the selling stack in overall measurement. The next thing we must see in the MACD indicator is its MA line which consists of 2 line, the lower period and higher period. Whenever the lower period MA crosses the higher period of MA, the bulls are starting to stack the long position. On this current structure, the MA cross over is occurring on the positive side which could be a normal bullish structure although it's not as strong as when it crosses on the negative side.
From the RSI perspective, we can see that even the RSI is forming a series of lower low and lower high, there isn't any sign of reversal yet as the 2nd criteria of divergence hasn't been met yet. For a proper reversal pattern that gives the sign of topping out, the RSI must touches again the overbought region one more time for the confirmation.
With the current structure of MACD and RSI, it's very typical that the price is now trending at the potential of wave 3 structure and it's clear that the 5 wave structure hasn't finished yet. I'm still waiting for the potential upside moves in the near future to complete this wave structure. The 5th wave structure may ends up at the $14000 zone.
First, the white region is the key level on the lower degree of this cycle. This key level has invalidated the previous potential of Head and shoulders pattern so far. After touching this level, the price has spiked up to almost $13600 region. Next thing we must see when we want to measure current momentum is to look at the oscillator indicators which usually provide a good valuation of current momentum in the market. I use the MACD and RSI which based on my experience mostly pretty accurate.
From the MACD perspective, you know that the histogram is ticking up and is now entering the positive side on the 4 hours chart. This kind of condition is showing up because the buying stack is bigger than the selling stack in overall measurement. The next thing we must see in the MACD indicator is its MA line which consists of 2 line, the lower period and higher period. Whenever the lower period MA crosses the higher period of MA, the bulls are starting to stack the long position. On this current structure, the MA cross over is occurring on the positive side which could be a normal bullish structure although it's not as strong as when it crosses on the negative side.
From the RSI perspective, we can see that even the RSI is forming a series of lower low and lower high, there isn't any sign of reversal yet as the 2nd criteria of divergence hasn't been met yet. For a proper reversal pattern that gives the sign of topping out, the RSI must touches again the overbought region one more time for the confirmation.
With the current structure of MACD and RSI, it's very typical that the price is now trending at the potential of wave 3 structure and it's clear that the 5 wave structure hasn't finished yet. I'm still waiting for the potential upside moves in the near future to complete this wave structure. The 5th wave structure may ends up at the $14000 zone.
Bitcoin : Short term bias and targeted levels
There isn't much talk I can say about the latest drop on the bitcoin's price which I can say as a normal behavior when you see the price drops at the overbought region and under a huge divergence on the RSI and MACD.
Price had another almost 7% drops in the last 12 hours of trading session. During this drop, it reminds us again that the volatility is coming and we might see another high level of volatility in the near future. For now, it is still trending slightly above the .236 fibonacci level which is becoming a major support based on the fibonacci rules. But if I assume this movement as the completed 5 wave structure, we can expect further melt down from the price to test at least at the $12500 region or the area of 382 fibonacci which is having an alignment with the previous broken resistance that is now acting as a support. A test toward this area is logical in my opinion because it will gives us a sign of the end of potential ABC correction pattern and the phase 2 of break out strategy.
Still we must expect a potential of liquidation zone at the $12000 for this moves so it won't trap you with the long wick to the downside. Upside target is at the $16000 as the -.618 fibonacci level.