BTC historic convergence? Looking at RSI and MACD.
Updated
all of my TAs lately have been bullish and the reason for this is I’ve been trying to show from different angles why we’re currently in a major consolidation, and why you should gear up to be going long.
Today’s lesson covers MACD and RSI with price movement, focused on divergence and signals calling a trend continuation or break.
First I want to mention the inverse h&s we saw emerging over February. Back then the chart paired with the MACD oscillator had strong basic signals for a trend reversal -- (but we weren’t close to the big 2018 correction we were about to see; the stiff bull run from October to January had no significant consolidations along the way proving a massive retrace/ correction was imminent. Many believe we’re still a long way off completing it) -- These signals - proved by the MACD divergence - gave us a good bull swing, and tipped off (short of, however) where one could expect the apex of the head to be, as the 3rd higher low formed on the MACD 2nd of Feb following a trend line from the previous two lows. When the head rejoined the neckline on the 20th the h&s was confirmed; RSI went into overbought and low volume showed bull desperation, as those selling on the way up were able get grab higher prices. With a little better price strength but a lower volume to match, we see a second attempt at a breakout at the close of the right shoulder. We seemed to have all the signals this inverse h&s pattern would not exist as a pivot point for a reversal.
Following the fractal waves we’ve seen BTC printing - though I haven’t outlined them here - it is very possible we are seeing another h&s form at a potentially pivotal time. Is there anything happening differently we can see that would suggest this inverse h&s to signal a reversal, temporary or otherwise, of the dominant bear trend?
Fast forward to present time:
We can see lately the volume is small but we’ve been hitting the oversold on the RSI with quite a disparity from the MACD & signal line, while price is consolidating sideways. This shows a desperate test of the dominant down trend and significant exhaustion of bear volume, meaning those that want to sell aren’t making preferable targets. The head of this potential h&s has hit the major support line, matching the head price of the last inverse h&s; it is tempting to call this a revisit of the old bottom, which is trending upwards, and won’t be broken soon.
During a consolidation there is not much momentum either way, and you usually need momentum to break out of a trend. Due to this, I suspect a steady climb to 7,7k. If the dominant bear trend is indeed here to stay this is the resistance price, matching the red dotted line on the chart marking the top of the current down channel. If the price makes it comfortably into 7,7XX, I suspect it will soar above 8k, whether it be due to people getting back hope, stop loss concatenations, or better TA than this showing more than a bull leg has occurred. After 8k the inverse h&s begins to emerge invoking the question I’m writing this TA for:
will it break the neckline, or at least form a raised right shoulder?
Can I start calling bullish now?
Today’s lesson covers MACD and RSI with price movement, focused on divergence and signals calling a trend continuation or break.
First I want to mention the inverse h&s we saw emerging over February. Back then the chart paired with the MACD oscillator had strong basic signals for a trend reversal -- (but we weren’t close to the big 2018 correction we were about to see; the stiff bull run from October to January had no significant consolidations along the way proving a massive retrace/ correction was imminent. Many believe we’re still a long way off completing it) -- These signals - proved by the MACD divergence - gave us a good bull swing, and tipped off (short of, however) where one could expect the apex of the head to be, as the 3rd higher low formed on the MACD 2nd of Feb following a trend line from the previous two lows. When the head rejoined the neckline on the 20th the h&s was confirmed; RSI went into overbought and low volume showed bull desperation, as those selling on the way up were able get grab higher prices. With a little better price strength but a lower volume to match, we see a second attempt at a breakout at the close of the right shoulder. We seemed to have all the signals this inverse h&s pattern would not exist as a pivot point for a reversal.
Following the fractal waves we’ve seen BTC printing - though I haven’t outlined them here - it is very possible we are seeing another h&s form at a potentially pivotal time. Is there anything happening differently we can see that would suggest this inverse h&s to signal a reversal, temporary or otherwise, of the dominant bear trend?
Fast forward to present time:
We can see lately the volume is small but we’ve been hitting the oversold on the RSI with quite a disparity from the MACD & signal line, while price is consolidating sideways. This shows a desperate test of the dominant down trend and significant exhaustion of bear volume, meaning those that want to sell aren’t making preferable targets. The head of this potential h&s has hit the major support line, matching the head price of the last inverse h&s; it is tempting to call this a revisit of the old bottom, which is trending upwards, and won’t be broken soon.
During a consolidation there is not much momentum either way, and you usually need momentum to break out of a trend. Due to this, I suspect a steady climb to 7,7k. If the dominant bear trend is indeed here to stay this is the resistance price, matching the red dotted line on the chart marking the top of the current down channel. If the price makes it comfortably into 7,7XX, I suspect it will soar above 8k, whether it be due to people getting back hope, stop loss concatenations, or better TA than this showing more than a bull leg has occurred. After 8k the inverse h&s begins to emerge invoking the question I’m writing this TA for:
will it break the neckline, or at least form a raised right shoulder?
Can I start calling bullish now?
Note
Here’s what we’ve got going bull so far:we have two lower lows coming off a low in the down channel, paired with a higher low double bottom, coming off a low in the MACD oscillator
the MACD line has crossed its signal line into an up trend.
RSI oversold vs moving averages levelling out
Here’s what we’re waiting on:
if the current price movement makes another top close to the neckline but remains below the MACD channel where i’ve marked a double line of resistance, the likelihood of an affirmative inverse h&s is strong and we’ll see the MACD form a zig-zag channel, continuing up as represented by the dotted green line
if the next top remains in the down channel but on the MACD pushes out of the double resistance, the likelihood of a delayed reversal is strong
if the RSI encroaches overbought but the MACD doesn’t follow suit, the likelihood of a continued consolidation is strong
Here’s what we don’t want:
The MACD line crosses its signal line, and where it is currently is the height of the new top
Overall I say we have a strong likelihood of a bull leg and a to-be-determined likelihood of it forming into a bull run. Neither means we’ll necessarily escape the current dominant down trend caused by the necessary price correction. The BTC market is currently weak, and a weak market creates a bubble in the first place. Going off technical analysis alone, even if we do escape the downward trend, it doesn’t mean we won’t shortly retest it. Though once we get there the story could be different - the market a different place, blockchain/ cryprocurrency, a different world. Who knows, but this gives us hope. I for one would not pity the HODLs for not having weaker hands.
This has been a Milk & Bread educational broadcast for my own purposes.
I hope this may be beneficial for others too
for non-beginners: please leave advice and critique in the comment section below, if you have any.
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