[BTC] Bulls Continue to Deliver as Chance of Reversal Increases
Updated
In my last post I showed you the more or less parallel support/resistance lines that I was watching in the short-term as price continued descend to that important bright red trendline. Got close to it but not all the way down... yet.
I extended the lines that kept the downward staircase pattern. On this 1-hr time frame you can see in hindsight of course that each stair step down had a consolidation triangle or bear flag held up by these rough trendlines. Each leg down had a shorter drop and shorter consolidation as it got closer to the lows at $7040, which was a good signal that the bears wearing become exhausted.
We dipped down, which wasn't unexpected, from $7.4-7.5k yesterday and the lowest white trendline had held us up long enough that I was comfortable enough to re-invest a little bit of the profit I realized at 7.5k to my position with a tight stop-loss. Turned out to be a good move and buyers propelled us back up above the darker red uptrend line that has been a significant pivot point. Now though, we do seem to be strongly above it after re-testing it and the white trendline just below it, resulting in a couple bullish hammer candles on the hourly chart. Now as we cut through those previous resistances, I'm slowly scaling out of part of my position and holding half for mid-long term.
Resistance to watch now is the highest white trendline that capped the recent jump at $7600. If that is cleared then we can zoom out and try to assess the bigger picture on the 4-hr and 1-day charts. Watching 12 and 26 EMAs on all time frames still!
I was expecting to see a touch of the long-term support trendline just below at $6900 but bulls showed up quickly. I had been buying a little each stair step down, not trying to time the bottom, and it turned out to be a good strategy. Although the likelihood of going back down to test that $6900 area would be ideal for a reversal, I don't see it as necessary to have a successful reversal/bounce. The selling had been intense on the way down and we still have a higher low formed on the daily time frame which helps strengthen my view that we are converging to a point of equilibrium in a large triangle.
I extended the lines that kept the downward staircase pattern. On this 1-hr time frame you can see in hindsight of course that each stair step down had a consolidation triangle or bear flag held up by these rough trendlines. Each leg down had a shorter drop and shorter consolidation as it got closer to the lows at $7040, which was a good signal that the bears wearing become exhausted.
We dipped down, which wasn't unexpected, from $7.4-7.5k yesterday and the lowest white trendline had held us up long enough that I was comfortable enough to re-invest a little bit of the profit I realized at 7.5k to my position with a tight stop-loss. Turned out to be a good move and buyers propelled us back up above the darker red uptrend line that has been a significant pivot point. Now though, we do seem to be strongly above it after re-testing it and the white trendline just below it, resulting in a couple bullish hammer candles on the hourly chart. Now as we cut through those previous resistances, I'm slowly scaling out of part of my position and holding half for mid-long term.
Resistance to watch now is the highest white trendline that capped the recent jump at $7600. If that is cleared then we can zoom out and try to assess the bigger picture on the 4-hr and 1-day charts. Watching 12 and 26 EMAs on all time frames still!
I was expecting to see a touch of the long-term support trendline just below at $6900 but bulls showed up quickly. I had been buying a little each stair step down, not trying to time the bottom, and it turned out to be a good strategy. Although the likelihood of going back down to test that $6900 area would be ideal for a reversal, I don't see it as necessary to have a successful reversal/bounce. The selling had been intense on the way down and we still have a higher low formed on the daily time frame which helps strengthen my view that we are converging to a point of equilibrium in a large triangle.
Note
Oh and I forgot to mention I added a new longer term trend here in light blue from all time highs. Here's a big picture look at where these long term trendlines come from. I'll probably make another post soon to try and analyze the big picture moves as we get closer to an equilibrium.
Note
Another look at the hourly chart as we got another pullback and quick recovery back to that pivotal dark red trendline. Starting to see a warning sign now, we might be forming a rising wedge here. If we are then a straightforward wave count would indicate we are on our last leg up before breakdown from the formation. Unless bulls can rocket the price up past the topmost white trendline with good volume, I'm not gonna make any big orders until we see a clear trend.
Not gonna bank on the rising wedge breakdown yet, just waiting to see if and how we react to that top resistance line. Breakdown would theoretically put us back to the lows just above $7000, which would be a healthy retest/consolidation to get a better grasp on our longer term direction.
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