After many days of falling with no retrace, Bitcoin is due for a relief rally that will most likely be another short-term rally. On the daily view we can see the price structure on this drop is mirroring the left side nearly perfectly. When the price briefly touched the 6,100 level, it matched the bottom price point on the left side before the big rally began. If it continues to mirror the left side of this structure, we could be setting up for a head and shoulders formation which is why I am calling for a short-term rally right now.
Let's take a look at the weekly view:
The price wicked down to the 89EMA (purple) perfectly and this moving average held the price up at the end of the May drop as well.
Also take a look at the BTCSHORTS on BitFinex right now:
It is rapidly approaching the previous high and what happened after the Shorts reached this level? First we saw a huge bearish divergence on RSI then a massive short squeeze on the spot market.
Seeing shorts rising this rapidly is setting up a perfect opportunity for exchanges to pull another short squeeze in the upcoming days.
Looking up at the main chart we see the Stochastic is well below the lower boundary on the daily view.
The RSI is also very oversold and looking back in the past every time the RSI got to these levels we saw a rebound even if it was just temporary.
My first target on this long is up at the 0.618 fib level around the 6,800 price range. This should intersect pretty closely with the 50MA (blue) on the daily. The volume profile tool shows this range has high trading volume as well so should act as fairly strong resistance. It's possible we see the price break that resistance as well, but for now I am going to stick to this target and assume a head&shoulders formation plays out. This all depends of course on how big the next short squeeze is, because if it's big enough it will most likely have no issue breaking past 6,800.
Please like this idea if you found it useful. Thanks!
Let's take a look at the weekly view:
Also take a look at the BTCSHORTS on BitFinex right now:
Seeing shorts rising this rapidly is setting up a perfect opportunity for exchanges to pull another short squeeze in the upcoming days.
Looking up at the main chart we see the Stochastic is well below the lower boundary on the daily view.
The RSI is also very oversold and looking back in the past every time the RSI got to these levels we saw a rebound even if it was just temporary.
My first target on this long is up at the 0.618 fib level around the 6,800 price range. This should intersect pretty closely with the 50MA (blue) on the daily. The volume profile tool shows this range has high trading volume as well so should act as fairly strong resistance. It's possible we see the price break that resistance as well, but for now I am going to stick to this target and assume a head&shoulders formation plays out. This all depends of course on how big the next short squeeze is, because if it's big enough it will most likely have no issue breaking past 6,800.
Please like this idea if you found it useful. Thanks!
Comment:
The market looks incredibly weak right now, didn't expect it to fall that much overnight. Right now price is still hovering over the .768 but if this breaks, the plan for a rebound to 6,800 is going to be called off for the short-term
Comment:
Okay some good news, the .786 held nicely and we got another bounce. I like the looks of the buying volume on each of these jumps compared to the selling volume surround it and it’s especially apparent on BitMex. Now the next big challenge will be this 89EMA on the hourly (shown in lime green). the price tried to pierce this at 7,100 and failed which led to another big drop. And then recently it tried to get past and was held down once again. This 89EMA has not been broken since the entire drop started from 8,500. So this is definitely something to keep my eye on. The purple line above is 100MA which will act as the next resistance. Finally above that is the 200Ma (orange) which is getting closer and closer to approaching the 0.618 around 6,800 price range. If price can get past this 89EMA, it’ll only be a matter of time before it can get up towards the 6,800.
Order cancelled:
And the .786 broke. This market is in really bad shape. I thought it would at least have some strength to get up towards the 6,800 range but couldn't even manage that. I still think a reversal is coming in the next week or 2, just keep an eye on the shorts. They're approaching very high levels and a short squeeze is going to have to happen soon. I will remain flat until clearer signals emerge
Trade active:
Update: Turns out that drop yesterday was nothing but a bear trap. The price bounced right back up above the 0.786 which is giving some positive signs for the bulls.
I meant to update last night when I noticed some massive bullish divergences on the RSI and CMF before today’s jump.
Take a look at this snapshot:
Another bullish sign was a nice wick down and bounce off the 89EMA on the weekly (in pink). This is something I have mentioned several times through my updates to keep a close eye on.
I also noticed shorts were starting to drop on Bitfinex, see how much they fell from last night through today:
I decided to open up a small long position last night and I’m glad I did with today’s jump, however we are not totally out of the woods. I think it’s possible we still get up towards the 0.618 around 6,800 but another big drop after that is definitely still in play.
Looking at the shorts, we could see them climb back up again and maybe form a bearish divergence similar to the one we saw occur back in June which could lead to a real rally in the upcoming days/weeks. Or shorts will make a stronger rally and the price will continue to dump into the bottom of the falling wedge shown here:
Another possible sign of an impending dump is a death cross from the 200MA (orange) and the 4000MA (light blue) on the daily view (seen in last chart image above) If this happens, we will most likely see many bearish weeks ahead of us.
In conclusion, we have some short to medium term bullish signals that could bring us some upside over the upcoming days. But from a longer term perspective there are many bearish signals that are apparent on higher time frames than the bullish signals which are only currently seen on lower time frames.
Hope this helps you guys!
I meant to update last night when I noticed some massive bullish divergences on the RSI and CMF before today’s jump.
Take a look at this snapshot:
Another bullish sign was a nice wick down and bounce off the 89EMA on the weekly (in pink). This is something I have mentioned several times through my updates to keep a close eye on.
I also noticed shorts were starting to drop on Bitfinex, see how much they fell from last night through today:
I decided to open up a small long position last night and I’m glad I did with today’s jump, however we are not totally out of the woods. I think it’s possible we still get up towards the 0.618 around 6,800 but another big drop after that is definitely still in play.
Looking at the shorts, we could see them climb back up again and maybe form a bearish divergence similar to the one we saw occur back in June which could lead to a real rally in the upcoming days/weeks. Or shorts will make a stronger rally and the price will continue to dump into the bottom of the falling wedge shown here:
In conclusion, we have some short to medium term bullish signals that could bring us some upside over the upcoming days. But from a longer term perspective there are many bearish signals that are apparent on higher time frames than the bullish signals which are only currently seen on lower time frames.
Hope this helps you guys!
Comment:
Trade is still active, starting to see some bullish momentum kicking in. I wanted to show you this head&shoulder formation that I mentioned over a week ago in my updates. This is what I think might happen if price reaches the 6,800 range:
Looking up at the moving averages above (200 in orange, 400 in light blue) you can see I drew as accurately as possible where they are projected to cross. This doesn’t necessarily mean immediate downside, but it would conform to the idea of this head and shoulders pattern and failure to break past the 6,800 region which is still my plan right now.
There is also this inverse head&shoulders on the 4hr time frame:
Looking at the shorts chart, it’s showing some signs of more downside. That bearish divergence on the daily RSI could lead to more shorts falling which would lead to price increase on bitcoin.
There is also this inverse head&shoulders on the 4hr time frame:
Trade active:
Hey guys just wanted to update, this idea is still very much in play despite dropping all the way down to 5.8k. This head and shoulders on the daily is still valid, but we will see how strong the bulls are if they’re able to keep this thing going past that.
Some good signs for the bulls are these huge bullish divergences on the CMF, RSI, and MACD.
Additionally, despite briefly dipping below, the weekly candles are still above the 89EMA which is a strong sign of upside.
One thing to be aware of is the 200MA and 400MA on the daily. Watch these, because they are about to cross over the next few days and that could possible lead to downside even with all the divergences and bullish sentiment in the market currently.
One thing to be aware of is the 200MA and 400MA on the daily. Watch these, because they are about to cross over the next few days and that could possible lead to downside even with all the divergences and bullish sentiment in the market currently.
Comment:
Shorts continue to climb, almost reaching the previous all-time high. Big bearish divergence there is still in play, so the shorts could start dropping fast which would be triggered by a squeeze on the spot market. IF this happens, expect huge jump in price:
Comment:
Comment:
I believe we have reached the end of this relief rally already, if we can even call it that! Never got to 6,800 like I was calling for as the price is having trouble getting past 6600. Here is my new idea for a bearish outlook ahead:
