Hello everyone!
So as expected, Bitcoin dropped soon after confirming hidden bearish divergence in the 4h and 6h charts.
All hope is not lost! There are a lot of hidden bullish signals that have presented themselves from this dump.
The .618 located at $3,550 held. No 4 or 6 hour candle so far was able to close decisively below it.
There is hidden bullish divergence that is now presenting itself in the 4h and 6h chart. We have a much higher low in price, with a lower low in the RSI. This suggests the bear momentum is beginning to falter.
Only a close below $3,120 can invalidate this hidden divergence.
We still have a huge form of support located around $3,360 - the .786 bull retracement from this huge bounce.
It just so happens that a 5th wave down from our local high will place us at exactly this support level.
Support holding at this level would be extremely bullish, as it is arguably the last line of defense for the bulls.
On the 5d time frame, a bullish cross is attempting to form on the MACD. That candle closes later today, but as it stands the candle is bearish engulfing which isn't normally a good sign. Only a close above $3,700 would nullify that.
There is also the chance that we are still forming a giant ABC correction from the overextended selling pressure from November. Currently the target for that sits at around $4,550.
Holding the .618 here would be very bullish, though I do not see that happening. The dump was I believe a wave 3, and right now we are experiencing a slight relief from a wave 4 retracement.
If I am correct, a 5th wave will place us exactly on the .786.
TLDR
Immediate support:
$3,550
$3,360
$3,150
Immediate resistance:
$3,680
$3,920
$4,100
I believe at this point we will most definitely test the .786 retracement. What the market does at that point will decide our entire medium-term future. This particular area would have a very high RR for a long, so I would strongly suggest to look for a long entry around this area. I am still extremely bearish until a break of $4,100.
A 4h close below $3,120 will initiate a short with an initial target of $2,435.