Long

BTC Next few hours critical. Double top - retrace to $7300 poss

Updated

(Note: Chart is BTC/EUR - shows same trends as BTC/USD as BTC/fiats all track pretty much the same)

So it's looking like we could have a double top for BTC/USD. This is very evident on the daily chart and the most recent candle - also clearly shown on 4 hourly chart too.

If we break the current point of support- which is around $10700/€8700-ish, then we could drop much lower to around the $7300/€5800 mark as a retrace.

That said *we could bounce off $10700/€8700 and continue to go higher. So the next few hours will be critical.

I'm a fan of patterns. Although they're not the ultimate indicator - they often help demonstrate herd mentality.
Go to Google, search for "double top" and have a look at the images, there's a lot of similarity between BTC's recent charting and strong double top examples.
In fact, the first result for me in Google, links to this:
excellenceassured.com/8022/double-bottom-bear-trap-failed-double-top-dax

It very closely represents BTC - which is interesting.

Note

Large volumes forcing the price down through the $10700/€8700 point to a dip of around $9461/€7263. We've rebounded slightly, but on a daily chart it looks like we've making good progress to complete a double-top - with the leg going down further.

4 hour chart is interesting as it shows large volume sell off and RSI hit about 23.
Typically, we bounce off RSI around 20-25 and we seem to be doing so here too.

Scenario 1 (unlikely - but hopeful):
It's possible that the selloff will cause a bounce and *maybe* it'll be seen as an OK completion of a double-top. We'll go up from here.

Scenario 2 (likely):
We're still short term bearish. Selloff may cause a further price drop down to the $7300/€5800 mark I previously mentioned. What we're seeing now could just be a small bounce on the way down.
Since I'm long term bullish on BTC, this present a potentially great buying opp.

What Am I Doing?
I've got some buys set up for key support points on the way down. I'm hoping the price drops. As it drops, I'm buying and (manually) also seeing if I can grab a quick profit on the way down.
Yes, I'm 'catching falling knives' but this has worked very well for me in the past. When I've tried to follow the methods used by other well know TAs, I've not come out well.
The one change I've made is the size of buys, I'm only working with about 5% of my total investment for each buy - so I'm limiting risk quite a lot.

The key here is buying extreme dips - setting the buys and waiting. Knowing BTC is so 'bouncy' and volatile, if there is an extreme drop, it'll bounce back at least 40-80% most of the time (although if you don't sell, you can miss it...and it drops further leaving you behind).

Since I'm long term bullish, if I fail to sell on any bounces, it's no problem - I'll continue to hold regardless.

I had a buy set at €7700 which caught (just about the lowest point).
We should bounce from 23 RSI to at least 35 (maybe more). Hopefully €8300/€8400 or so. I've got a sell set around here.

I've then got further limit buys set farther down.
FYI these are actually €7k, €6.5k, €4.7k.

If things keep going up and we prove to be bullish - no problem, we can just buy in and have more confidence in the rise in value and our investment.

BTC seems very volatile after this big drop, in the few minutes I've written this comment it's gone 8100, 8040, 8100, 8200, 8272.

Note

TLDR;
We're testing support zones then dropping down through them. Still more room to fall. RSI patterns on 4 hour chart similar to price drops in early Feb!
Next major support zone I can see are around €6900/$8496 and €6600/$8127.

-------------------------

I sold my minor position at €8150/$10030 rather than the desired €8300 as we kept retesting the support level - and now we've dropped down again to around €7600/$9350.

That said, on a 4 hour chart our RSI did move up from 23 to 36 - just above the 35 we estimated, and RSI falling again now, currently at 27 with room to go further.

In general - going UP or DOWN if we keep re-testing a resistance or support level, there's good potential we'll eventually go THROUGH it.

So, when we're bull and we keep pushing up against a resistance level - it's likely we'll push through.
Right now, it's short-term bearing and we're repeatedly testing some minor support zones as we move down.

RSI
Interestingly, on 1st Feb & 2nd Feb plus 5th & 6th Feb we also instances where we hit around 20-22 RSI, and bounced up a little to then drop back to 20-22.
One the chart, this shows as the value dropping, bouncing a little, then falling further again.

Right now, we hit 20, bounced to 35 and it's going down (27) - so to me this suggests we'll shortly have another drop!

Summary:
- Similar RSI pattern to previous price drops, on 4 hour chart
- No new bullish news about Bitcoin nothing to push us up out of the bearing scenario we're in, only reports of the price falling (same old, but this doesn't help Joe Public want to invest in bitcoin and add new money to the market!)
- Continuously testing support zones....in bearish scenario this means we'll likely fall through them given time.
- We're now well below 200MA.
- Next major support zone I can see are around €6900/$8496 and €6600/$8127 - I wouldn't be surprised if we hit these. Although we might get a nice bounce or even a reversal off them.

Note

So we bumped down against €6800/$8370 - just a little lower than our €6900/$8127 expectation.
(I had a small buy triggered here, which I exited at €7121/$8770).

On the 4 hour chart, RSI is back down to 19/20. Interestingly as we thought, we've repeated a seemingly common RSI pattern - hit around 20, then briefly bounce up, then back down to about 20 - this is usually followed by an increase to around 35-48 RSI. In a bearish market this usually just represents a bounce on the way down.

Looks like we may hit the €6600/$8123 support very very soon, followed by a major support zone at €5900/€6200 ($7261/$7631). If we break through *that* zone then it's likely we'll have quite a long way to fall as the next major support I have shown is at €4500/5540....then followed by €3500/€3720 ($4308/$4580)

Long term, my gut feeling is that we'll end up hitting the same levels as we did 6th Feb OR LOWER - possibly down into the €3500/€3720 ($4308/$4580) zone - before we'll bounce back up significantly.
Why this feeling? We're going down at the moment, people will look to the last big drop (start of Feb) - just as I have. They'll be expecting it to bounce back up - as it did in Feb. This means there is likely lots of support at this level which also means it could create a bounce back supported by FOMO.

If this happens, it could be interesting for Bitcoin in the medium term, as it's likely we wouldn't bounce back to €9500/$11700 but possibly more like €6000-€7000 ($7380-$8600).
To get back higher, we'd need a big bounce or a significant break in the bearish trend we've since since the All Time High in Dec.

Meniro

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.