Bitcoin 4H Hidden Bullish Divergence
Updated
Bitcoin looks like a really good R:R long opportunity to me. It's risky as the downtrend is strong but with tight stops it stands to be a potentially nice trade.
We currently have a 4h hidden bull divergence converging with 0.618 fibonacci retracement in an uptrend. This is one of the most common retracement levels to reverse on.
I plan to ladder in with stops around .618 level.
To play devils advocate; MA's crossed down so that's bearish and concering; ADX and DMI- are also fairly high showing a strong trend in the down direction. We may have some more legs to go down but I don't think too far. As Rothschild said "Buy when there's blood in the streets, even if the blood is your own."
This is a good time to stock up on alts imo -0.06% in the case that the uptrend continues and I believe we may see the start of an alt-coin season. They have been bloody for quite a while.
I think that 6800 will hold; its a retest of the inverse head and shoulders neckline that reversed the downtrend and started this upswing in the first place.
I will ladder in longs down to 6700ish and up to 7000 as we approach it on the way back up. Stops below or around 6700 area. If 0.618 breaks I expect we may see a violent move/capitulation down straight through to the next fib around .786 but I would place my stops tighter to the 0.618 to avoid that if possible.
Best of luck traders!
We currently have a 4h hidden bull divergence converging with 0.618 fibonacci retracement in an uptrend. This is one of the most common retracement levels to reverse on.
I plan to ladder in with stops around .618 level.
To play devils advocate; MA's crossed down so that's bearish and concering; ADX and DMI- are also fairly high showing a strong trend in the down direction. We may have some more legs to go down but I don't think too far. As Rothschild said "Buy when there's blood in the streets, even if the blood is your own."
This is a good time to stock up on alts imo -0.06% in the case that the uptrend continues and I believe we may see the start of an alt-coin season. They have been bloody for quite a while.
I think that 6800 will hold; its a retest of the inverse head and shoulders neckline that reversed the downtrend and started this upswing in the first place.
I will ladder in longs down to 6700ish and up to 7000 as we approach it on the way back up. Stops below or around 6700 area. If 0.618 breaks I expect we may see a violent move/capitulation down straight through to the next fib around .786 but I would place my stops tighter to the 0.618 to avoid that if possible.
Best of luck traders!
Trade active
tradingview.com/chart/wHUgexfv/Three White Soldiers reversal pattern manifested out of the 4h bull divergence. This is a great sign and a strong reversal pattern. This further supports my long idea; I may even add some more around 7100 after seeing the Three White Soldiers appear.
Trade is active; my targets will around be the purple resistance line and above for when we attempt to break back into the triangle around 7500-7600. I may leave a portion to let run in case we break above previous highs around 8250-8500
Good luck and Happy Trading!
"BREAKING DOWN 'Three White Soldiers'
The three white soldiers candlestick pattern suggests a strong change in market sentiment. Without any significant shadows, the market opens slightly lower, the bulls take over the rally all session and close near the high of the day. The pattern may appear during periods of consolidation or following a prolonged downtrend, but the latter represents the most attractive opportunity for traders to take long positions. In addition, the pattern may be preceded by other candlestick patterns suggestive of a reversal, such as a doji."
investopedia.com/terms/t/three_white_soldiers.asp
Note
tradingview.com/chart/wHUgexfv/We have experience a retracement down to 6900 and walked back all of yesterdays gains. The Three White Soldiers did plant close valid; the last one being a little smaller than I'd like but it did open and close above the candle before it with minimal wicks.
From the Investopedia link I showed above on the pattern:
"When trading the three white soldiers pattern, it's important to note that the strong moves higher could create temporary overbought conditions. The relative strength index (RSI), for example, may have moved above 70.0 levels. In some cases, there is a short period of consolidation following the three soldiers pattern, but the short- and intermediate-term bias remains bullish. The significant move higher could also reach key resistance levels where the stock could experience consolidation before continuing to move higher."
I held back on entering above 7000 and added a small addition at 6900 again. While typing this we have since fallen below 6900. If we fall below 6850 and create a new low the hidden bull 15m div will be invalidated.
We are currently resting on 6850.
Note
s3.amazonaws.com/tradingview/snapshots/x/XlcMAkNL.pngRisky Traders can look to enter more to there positions below at or below 6900. Risk averse traders can start thinking about stops.
We touched 6850 and bounced to 6900 but have yet to break it.
Trade closed: stop reached
We fell through the danger zone and did not recover. We have broken back below the neckline of the large inverse Head and Shoulders. This is very bearish. Our three white soldiers did appear but it seems fundamental news trumped technical analysis today. The Bitcoin ETF decisions were delayed and pushed back until Setpember and it seems there was some potential insider trading going on. Alts like ETH and LTC got SLAUGHTERED. There was a large over 5.5m
USD hidden sell order placed on Bitfinex Ethereum markets only 15 minutes before the news dropped. All technicals pointed up; so whoever decided to dump that order may have had some insider information IMO. Your stops should have been between 6600-6850ish so this trade should be stopped out. I did not actually place one so I am still holding my position but do not necessarily recommend doing the same. Hopefully your stop-losses were tight enough at or around $6700 area like my original post to avoid much damage.
-Happy Trading
Note
I do want to point out that while today has been bloody and quite bearish; I can't help but see bullish divs all over the place. Today's move down created a regular bullish div on the 4h. Price - lower lower ; Oscillator/RSI - higher low.
We've now got a smaller regular bull divergence inside of a larger hidden bull divergence. I just recommend keeping an eye on it; keep positions smaller and funds ready on the side. Dollar Cost Averaging on the drops may prove a smart strategy.
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.