BitcoinLong
BTCUSD: We (finally) reached the bottom?
Updated
In my idea "BTCUSD at major resistant point" I talked about the Cup & Handle formation and that the target was $5500 and we've come very close to that now.
In my idea "BTCUSD at important support levels" I wrote the following:
"So that leaves me to think that the rebound will be just another dead-cat-bounce. That I haven't noticed much (or anything) negativity wrt bitcoin (price) and people are still WAY too relaxed about it, makes me think we can go down (much) further.
Markets tend to bottom when sentiment is extremely negative and people start to panic and I still don't see that."
It was indeed a short-lived dead-cat-bounce. What I didn't see then (at all), but I'm actually seeing now is that there is finally starting to creep in a bit of panic and negativity.
Still not a lot, but that could be because I mostly follow 'hard-core' bitcoiners, so it's very unlikely that I'll see lots of "bitcoin is dead" messages.
Also on the chart front there is now reason to become optimistic about future price advances.
The price just bounced off the ~$6000 level, which is right off (another) Fibonacci level from the long term trend. What is also a good sign is that if you create a Fibonacci retracement from the high in December 2017 to the current low, the various levels are nicely aligned with intermediate support/resistance levels. I often use that technique to find future price levels.
Another good sign is that there now really was a sell off by falling out of my downward trending trend channel. This is good as markets tend to overreact at both bottoms and tops.
Thirdly, there is now a clear divergence visible on the 4h chart between the price and both the RSI and MACD
.
While the price made lower lows, both RSI and MACD made higher lows, indicating that the downward momentum is coming to an end.
The DeMark indicator on the daily is now on an 8 and it's very likely we'll get to a 9, which is also an indicator that (downward) momentum is coming to an end.
What is also positive is that we (almost) reached the target of the triangle (on the 4h chart). When the price (almost) reaches, but does not exceed, the target, that's often a signal for a reversal.
This all makes me positive for the short to medium term.
But I'm not convinced yet that it'll be straight up to all time highs from here on.
The weekly chart is still plain bearish and actually so is the daily. While the daily momentum indicators show clear oversold conditions, on the weekly there's still plenty of room to the downside. As there is also no (positive) divergence visible on weekly or daily time frames, there's still enough reason to be cautious.
So the most likely scenario is that we'll get a short to medium term bounce to possibly the $11-12k levels. How that develops and also how that effects the picture on the daily and weekly time frame will determine whether this really is the bottom and we do get to new ATH or whether this is a (more substantial) dead-cat-bounce once again.
In my idea "BTCUSD at important support levels" I wrote the following:
"So that leaves me to think that the rebound will be just another dead-cat-bounce. That I haven't noticed much (or anything) negativity wrt bitcoin (price) and people are still WAY too relaxed about it, makes me think we can go down (much) further.
Markets tend to bottom when sentiment is extremely negative and people start to panic and I still don't see that."
It was indeed a short-lived dead-cat-bounce. What I didn't see then (at all), but I'm actually seeing now is that there is finally starting to creep in a bit of panic and negativity.
Still not a lot, but that could be because I mostly follow 'hard-core' bitcoiners, so it's very unlikely that I'll see lots of "bitcoin is dead" messages.
Also on the chart front there is now reason to become optimistic about future price advances.
The price just bounced off the ~$6000 level, which is right off (another) Fibonacci level from the long term trend. What is also a good sign is that if you create a Fibonacci retracement from the high in December 2017 to the current low, the various levels are nicely aligned with intermediate support/resistance levels. I often use that technique to find future price levels.
Another good sign is that there now really was a sell off by falling out of my downward trending trend channel. This is good as markets tend to overreact at both bottoms and tops.
Thirdly, there is now a clear divergence visible on the 4h chart between the price and both the RSI and MACD
While the price made lower lows, both RSI and MACD made higher lows, indicating that the downward momentum is coming to an end.
The DeMark indicator on the daily is now on an 8 and it's very likely we'll get to a 9, which is also an indicator that (downward) momentum is coming to an end.
What is also positive is that we (almost) reached the target of the triangle (on the 4h chart). When the price (almost) reaches, but does not exceed, the target, that's often a signal for a reversal.
This all makes me positive for the short to medium term.
But I'm not convinced yet that it'll be straight up to all time highs from here on.
The weekly chart is still plain bearish and actually so is the daily. While the daily momentum indicators show clear oversold conditions, on the weekly there's still plenty of room to the downside. As there is also no (positive) divergence visible on weekly or daily time frames, there's still enough reason to be cautious.
So the most likely scenario is that we'll get a short to medium term bounce to possibly the $11-12k levels. How that develops and also how that effects the picture on the daily and weekly time frame will determine whether this really is the bottom and we do get to new ATH or whether this is a (more substantial) dead-cat-bounce once again.
Note
It's generally looking good and on the 4h chart there is an inverted Cup & Handle (& Handle), 'neckline' at $8660, visible with a projected target of about $11400.But there looks to be some resistance between $9100 and $9200 and I'm a bit worried about momentum and volume. If it strongly breaks the $9100/9200 area that should all clear up again and the C&H will then likely complete and take us to $11400.
But if it doesn't, then we can get a failed breakout and that usually results in an accelerated move to the opposite/down side. If it doesn't find good support around $7900-$8000 levels then things can get ugly again.
No need to get out of this bull trade just yet, but do make sure you have proper stop losses in place
Trade closed manually
Taking my profit and going back to neutral as momentum is now actually turning downwards. I can always take another position, but the risk for things to go south is too high afaic.
Related publications
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.