No, This Isn't a Bearish Divergence on Bitcoin Chart
That boom candle to 10.5 a few months ago is really messing with traders' heads right now. The huge wick is a curveball thrown at traders by the Insiders. It did it's job apparently. It's been throwing off trend lines and indicators since it appeared.
Let's set the story straight. At first glance it looks as though we have a bearish divergence, as we connect the top of that wick with price action we see now. If you draw that line, yes it appears to be a divergence.
But why would you ever draw any line at the top of that manipulation wick? That is UNRELIABLE INFORMATION.
It's bad practice to draw a line at the top of the wick because the RSI doesn't even account for wicks. So it can't diverge from what isn't included in its calculation.
If we draw the line from the candle bodies, then the divergence disappears.
Not financial advice but I hope this analysis serves to help you come to your own conclusions on the market.
Please like my ideas and follow if I helped you in any way.
Peace, Love, & Crypto,
B166ER
Let's set the story straight. At first glance it looks as though we have a bearish divergence, as we connect the top of that wick with price action we see now. If you draw that line, yes it appears to be a divergence.
But why would you ever draw any line at the top of that manipulation wick? That is UNRELIABLE INFORMATION.
It's bad practice to draw a line at the top of the wick because the RSI doesn't even account for wicks. So it can't diverge from what isn't included in its calculation.
If we draw the line from the candle bodies, then the divergence disappears.
Not financial advice but I hope this analysis serves to help you come to your own conclusions on the market.
Please like my ideas and follow if I helped you in any way.
Peace, Love, & Crypto,
B166ER
Comment:
There's a case to be made that there was a divergence on January 17th/18th but Bitcoin already recorded a 1,000 dip after that, before creating higher highs that ended the divergence.
Comment:
I took another look at this idea. There is a case to be made that the price action at the tops of the candles is flat while the RSI went up. So the question for me becomes...how do I weigh this? If a very small divergence causes a price decline at all it will be minimal. I'm a position trader so I don't sweat small swings. I personally have longs stacked in the 8K region just in case of a pullback. Hope this helps clarify how I really think about this!
Comment:
Maske2g made a great comment about this and I think he figured out why this doesn't sit right with me: "RSI is 14 periods long by default. Any RSI from prior to 14 periods is irrelevant. See if the divergence is there on timeframes where the wick is still in play. Even the weekly makes it obselete now, as it was over 14 weeks ago."
"You didn't come here to make a choice, you've already made it. You're here to try to understand why you made it."
―The Oracle
―The Oracle