Bitcoin and the weekly view
Before we get to the weekly chart let's first quickly sum up the 4H and daily. On the 4h a double top was formed with bearish divergence on the stoch. BTC failed to clear the low 8000's resistance level. On the daily all momentum indicators are pointing south so short term the path of least resistance is to the downside. It remains to be seen whether the fall will be limited, around 5% like we have been having since april or more profound. Also worth mentioning is that short contracts are now almost non existant having fallen sharply over the last few weeks. Consensus 2019 is now over and if we stick with historical trends then every summer/spring rally is followed by considerable falls across crypto. By considerable I mean at least 30% ish.
So this brings us to the weekly. It's a very simple chart, no shapes and a few key momentum indicators. I particularly like the Money Flow Index as this is one of the better momentum indicators out there which also incorporates volume into the equation which the RSI or stoch don't. So what can we take away from this?
1) During uptrend price respects the EMA, any fall to or below is quickly used as buying opportunity and price returns above the EMA. This is shown with little blue lines. In downtrend it's the reverse (little red lines). I show this like that as it's impossible to determine whether you are in a bull or bear market by looking at short time frames. Longer ones are needed and determining whether it's a bull or bear market also determines your trading strategy, which can't be the same for both!!
2)The MFI value looks to be below 60 during bear markets while the same number acts as support during bull markets. In a bull market when the index hits 85 price tends to fall. There has been only one instance of MFI being stretched and that was nov 2016 to feb 2017. This is because it took a long time (5 months) for the price to double. In the 2017 bull market prices would double quickly, MFI would hit 85 and prices would fall to the EMA. This is important for us as we are now flashing red on the MFI with the value at almost 100 after the price has doubled over a very short time frame Does this mean that over the next few weeks we will have a dump towards the EMA and crucial support of low 6000's? This would certainly coincide nicely with the spring/summer trend. A 30% price fall would bring the wick of any such move down to the mid 5000's only for the price to stabilize around the EMA and the low 6000's.
3) Let's finally look at the RSI. In a bull run 55 is the support while in a bear market it's the resistance. Anything up to or over 87 and the price falls. We are now in the low 90's. Another sign that the market is going to fall.
So now you also know how 'easy' it was to spot the end of the bear market. In march price passed the EMA, MFI crossed over 58 and a couple of weeks after that RSI crossed 55.
So could a different scenario play out? Could the market keep on growing? Well this is crypto, anything is possible. BTC at 20k tomorrow is possible however it would need incredible volume or a white swan event to take it higher. The 8300 - 8400 resistance is key.
Also we don't have to fall hard. This seems to be a 'strange' market where moves are not in waves like in the past but in 'steps' like a staircase. A big move up is followed by days of sideways movement only to be followed by another move up. This has been evident since march.
Remember always DYOR!!!!
So this brings us to the weekly. It's a very simple chart, no shapes and a few key momentum indicators. I particularly like the Money Flow Index as this is one of the better momentum indicators out there which also incorporates volume into the equation which the RSI or stoch don't. So what can we take away from this?
1) During uptrend price respects the EMA, any fall to or below is quickly used as buying opportunity and price returns above the EMA. This is shown with little blue lines. In downtrend it's the reverse (little red lines). I show this like that as it's impossible to determine whether you are in a bull or bear market by looking at short time frames. Longer ones are needed and determining whether it's a bull or bear market also determines your trading strategy, which can't be the same for both!!
2)The MFI value looks to be below 60 during bear markets while the same number acts as support during bull markets. In a bull market when the index hits 85 price tends to fall. There has been only one instance of MFI being stretched and that was nov 2016 to feb 2017. This is because it took a long time (5 months) for the price to double. In the 2017 bull market prices would double quickly, MFI would hit 85 and prices would fall to the EMA. This is important for us as we are now flashing red on the MFI with the value at almost 100 after the price has doubled over a very short time frame Does this mean that over the next few weeks we will have a dump towards the EMA and crucial support of low 6000's? This would certainly coincide nicely with the spring/summer trend. A 30% price fall would bring the wick of any such move down to the mid 5000's only for the price to stabilize around the EMA and the low 6000's.
3) Let's finally look at the RSI. In a bull run 55 is the support while in a bear market it's the resistance. Anything up to or over 87 and the price falls. We are now in the low 90's. Another sign that the market is going to fall.
So now you also know how 'easy' it was to spot the end of the bear market. In march price passed the EMA, MFI crossed over 58 and a couple of weeks after that RSI crossed 55.
So could a different scenario play out? Could the market keep on growing? Well this is crypto, anything is possible. BTC at 20k tomorrow is possible however it would need incredible volume or a white swan event to take it higher. The 8300 - 8400 resistance is key.
Also we don't have to fall hard. This seems to be a 'strange' market where moves are not in waves like in the past but in 'steps' like a staircase. A big move up is followed by days of sideways movement only to be followed by another move up. This has been evident since march.
Remember always DYOR!!!!
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