2018-6-12 BTC Current berish cycle comparison with BTCUSDSHORTS
Updated
Let's analyse 2 different situation and compare them with current market.
First of all, The left chart is BTCUSDSHORTS, i.e., how many margined BTC are being used to SHORT BTC.
The right chadrt is BTC price action.
Gree situation: BTCUSDSHORTS got it's All Time High, the majority of volume was betting against BTC.
The RSI of BTCUSDSHORTS was as high as 70, which is a lot. The price in green situation was in a long
sequence of DIPs and was near to a support and RSI of price action was close to 30, which means it was
really oversold.
Red situation: BTCUSDSHORTS was considerably high, RSI was super high (almost 80), it really needed to
go down. But does it affected price action? Well... Price wasn't close to a meaning support,
price's RSI wasn't too oversold, it had some more space to go down. When shorts fell sharply, price
moved higher too, but the absence of support didn't helped to have a trend reversal.
Yellow situation (current): BTCUSDSHORTS isn't too high, in my POV, they aren't near to ATH in any single
way. It could be really higher. The RSI for BTCUSDSHORTS is pretty high (75) which is higher than the RSI
in green situation. The price chart shows that prices are moving near to the same support that have
stopped the bears on green situation. The price's RSI is currently near to 30 but could be a little lower.
I feel like the current situation is more like the green one, but we can't be sure. I'm going to buy, because
eventough BTCUSDSHORTS volume isn't as big as it was in the green situation, the true is that the market
average volume now is smaller than it was in that situation too.
Of course, you should never forget setting stop-loss, because there is no oversold market that couldn't be
even more oversold.
First of all, The left chart is BTCUSDSHORTS, i.e., how many margined BTC are being used to SHORT BTC.
The right chadrt is BTC price action.
Gree situation: BTCUSDSHORTS got it's All Time High, the majority of volume was betting against BTC.
The RSI of BTCUSDSHORTS was as high as 70, which is a lot. The price in green situation was in a long
sequence of DIPs and was near to a support and RSI of price action was close to 30, which means it was
really oversold.
Red situation: BTCUSDSHORTS was considerably high, RSI was super high (almost 80), it really needed to
go down. But does it affected price action? Well... Price wasn't close to a meaning support,
price's RSI wasn't too oversold, it had some more space to go down. When shorts fell sharply, price
moved higher too, but the absence of support didn't helped to have a trend reversal.
Yellow situation (current): BTCUSDSHORTS isn't too high, in my POV, they aren't near to ATH in any single
way. It could be really higher. The RSI for BTCUSDSHORTS is pretty high (75) which is higher than the RSI
in green situation. The price chart shows that prices are moving near to the same support that have
stopped the bears on green situation. The price's RSI is currently near to 30 but could be a little lower.
I feel like the current situation is more like the green one, but we can't be sure. I'm going to buy, because
eventough BTCUSDSHORTS volume isn't as big as it was in the green situation, the true is that the market
average volume now is smaller than it was in that situation too.
Of course, you should never forget setting stop-loss, because there is no oversold market that couldn't be
even more oversold.
Note
A little update since I've posted this comparison: As you can see on the chart below, BTC price broke the support but wasn't able to go much lower. RSI went even higher, it's above 80! EIGHTY! The highest RSI recorded for BTCUSDSHORTS since Bitfinex started disclosing this infos. Price chart's RSI went lower than 30, which put it in a really oversold position. It already went as down as 20 in 2015, during that really long bear market. The dotted line shows us a really important support, if price touch it, it will be the 3rd time it will be supporting the price and it will start looking like a falling wedge (bullish reversal pattern).
Another important chart to look is the 1h chart below. Current price action is looking like a smaller falling wedge (bullish reversal pattern) and the most important: the two beautiful bullish divergences (bullish reversal pattern) at RSI and MACD in this time frame!
Maybe I'm totally crazy, but I can't see BTC going lower. But we must wait and see what's going to happen! Be patient!
Note
As you can see on the chart below, some bears started covering their shorts, this already reflected on shorts' RSI, which started falling too, but it's still above 70. We can also notice that looks like daily volume is increasing (we stil need more daily volume infos to confirm this).Falling wedge and Bullish divergence are pretty clear at 4h chart, will the reversal be confirmed? Let's wait.
Note
Let's look to the bigger picture again, the possible support I have mentioned earlier got touched today and it have supported BTC price really well. As you can see below, not even candle's wick have broken this support. BTCUSDSHORTS are still above the level of when I posted this analysis. The BTCUSDSHORTS' RSI have gone a little lower, but it's still above 70, when it go below this value, we may see some bigger price movements.Take a look at MACD too, it this support gets confirmed, a bullish divergence will be visible between current low and the previous support touch, this is a good reversal signal. Price's RSI went lower and now BTC is currently oversold. Remember that in a bear market (as the one we are in), an asset may stay oversold for a long time, so when RSI emerge above 30, it will be a good bullish signal too.
At last but not least, have you guys noticed that daily volume is increasing? 3 out of the last 4 days had volumes bigger than current volume's average. In my opinion this is a bullish signal too. Today we had a big DIP that I see as capitulation, when losing traders get tired of waiting and close positions on losses (BTCUSDLONGS have declined a little today).
I'm bullish now, I think this support is going to help BTC and we are going to see some positive price movement nearly.
DYOR
Note
Are you guys ready for the short-covering rally? It's coming.
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