Old man looks weak to stand up

XBTUSD.P

Chart may look a bit messy but stay with me on this, it will get clearer as I go through it. I prefer not to use fancy indicators but only daily/weekly/monthly key resistance/support levels along with some fibonacci levels and rsi. In overall, we are in the middle of last trading channel indicated with black lines. Parallel to this channel extremes we have a mid-channel resistance that provides a similar level with 50MA.

10580 is the crossing point of 3 key resistances. 1) 50MA 2) Mid-channel resistance line 3) Daily & Weekly Resistance. After reaching up to this level it led to a strong selling, proving that it is not going to be easy to break above this level. What is more scary is that the volume is dying. One would expect an increasing volume after we had a sharp bounce from 9000 levels however since then, volume bars remained with relatively same amplitudes.

Ichimoku also indicating 4 bearish signals on daily chart. 1) Tenkan is below Kijun. 2) Price is below Kijun but the price is inside the Kumo cloud. So we can take this as a neutral bearish signal. 3) Senkou span cross is turning red. 4) Chikou is below the price.

These are key levels to watch. Level between 10590 and 10650 is the first to look out. Back then, we had a false breakout of this level and the price reached to 11000 levels that is followed by a strong sell. Major resistance cluster is sitting at 10760-10860 levels. We need to break above this level to confirm a strong bullish signal. These levels are also corresponding to top of the Kumo cloud. If we want to see a full confirmation of the bull market, it needs to break above 12000 level and then we may see price to exceed 14000.

Daily RSI was above the mid-line for a long time but the last down movement pushed it below. Now, it is trying to break above that level and if it finds support from the mid-line, this may indicate some sort of weak bullish signal.

4H-RSI is jumping above the overbought level but it seems to be getting weaker. If it goes back into the extreme levels and can't make a new high as the price goes to higher levels, I'll take it as a weakness of the upper movement. What I like to see is that first RSI goes back into overbought level. Then the price makes a new high, maybe around 10700. RSI gives bearish divergence where the RSI line remains under the overbought level.

10700 is the 0.786 level of the last down movement however price may go a bit higher than this level. If this break above occurs with an RSI divergence on the smaller time interval. Maybe 5-15 minute chart, I will take this as a downward movement signal.

For the up-move to continue, price has to remain above 10100-10200 level. Any down movement that is breaking below this level is a strong bearish signal.

What will I do?
I will look out for the volume and the way the price will break above midline of the trading channel, 10600. If it breaks above that line which is also D1-50MA, with a low volume and then comes back to this line and breaks below again, I'll take that as a false break-out and go for a short position. I will keep the post updated as things happen.

Good luck on your trades.

Comment:

It goes as planned up to now. I mentioned that the first point to watch out is going to be 10650 level and the level did it work properly. Importance of this point stems from the fact that on July 19 price tested this level and on July 20 price broke above this level that led to strong selling, proving that the run to 11000 was a fake breakout. On July 22, same level, 10650, tested again but it failed to exceed this level. Today, we have seen the same rejection. Now we should watch out if 10400 keeps on holding. It was an immediate resistance on 4H and we should expect an S/R flip of this price. However, price still has room to retrace down to 10100-10200 level before we can turn fully bearish. Let's see how it goes.

Comment:

4H-RSI is also getting weaker and now it is inside the extreme levels. I think there is going to be one more try to break above key resistances, 10750-10850. If RSI remains inside the extremes with a bearish divergence and the move happens with relatively low volume, it might be a chance to jump on a short position.