BTCUSDshortsVlongs for June 18, 2018
Good morning, traders. This past weekend may appear to have given no definitive direction for Bitcoin, but we may actually have an idea of the short term direction. Let's take a look.
As I have continued to mention for over a month now, this downward movement appears a lot like the previous two movements as seen in these 4 hour and daily charts. The first in February was much more exaggerated and ended with a dip into the daily oversold RSI which propelled price up about 96% in 14 days. The second was during March and resulted in a huge short squeeze that sent price rallying from $6425 to $9990. This time around, price has already dipped into the oversold RSI which resulted in just a few hundred dollars of upward movement, however it has also resulted in price continuing to build out the triangle as in the previous two examples. In each iteration of the movement, we see RSI creating a triangle of its own and MACD breaching the same resistance level.
Shorts have continued to grow to just under 1:1 to longs. They are also building within an ascending broadening wedge which should see them squeezed at some point. When the ratio becomes greater than 1:1, we usually see a short squeeze of some sort. With price near the apex of the triangle, this seems inevitable, but just how far will price reach in response? Based on the height of the triangle, the initial target is around $7100. This would place it at the 23.6% retracement of the recent downward move, finding resistance at the bottom of the red triangle, and finding resistance at the top of the descending broadening wedge. This doesn't seem to be a finale to the build up of shorts and, as a result, could be just the first pressure release thereby creating a larger triangle for price, much similar in size to the April triangle. If so, then I would expect something along the lines of the blue triangle I've outlined.
The 1 hour chart shows us that price breached the resistance of the descending broadening wedge and then used that resistance as support while it moved sideways. The ascending blue line denotes resistance that price must breach in order to continue higher. We can also see a triangle being formed by RSI. MACD is beginning to build bullishly and %B is in the process of potentially breaching its own horizontal resistance.
The expectation is for a move up to the $7000-$7100 at least, if price can breach the top of the small triangle that it is currently printing. Whether it moves beyond that point is yet to be seen. A breach of the dashed descending broadening wedge would suggest that $7600 would be next up, and then $8000 and $8500 as the fibs denote.
As I have continued to mention for over a month now, this downward movement appears a lot like the previous two movements as seen in these 4 hour and daily charts. The first in February was much more exaggerated and ended with a dip into the daily oversold RSI which propelled price up about 96% in 14 days. The second was during March and resulted in a huge short squeeze that sent price rallying from $6425 to $9990. This time around, price has already dipped into the oversold RSI which resulted in just a few hundred dollars of upward movement, however it has also resulted in price continuing to build out the triangle as in the previous two examples. In each iteration of the movement, we see RSI creating a triangle of its own and MACD breaching the same resistance level.
Shorts have continued to grow to just under 1:1 to longs. They are also building within an ascending broadening wedge which should see them squeezed at some point. When the ratio becomes greater than 1:1, we usually see a short squeeze of some sort. With price near the apex of the triangle, this seems inevitable, but just how far will price reach in response? Based on the height of the triangle, the initial target is around $7100. This would place it at the 23.6% retracement of the recent downward move, finding resistance at the bottom of the red triangle, and finding resistance at the top of the descending broadening wedge. This doesn't seem to be a finale to the build up of shorts and, as a result, could be just the first pressure release thereby creating a larger triangle for price, much similar in size to the April triangle. If so, then I would expect something along the lines of the blue triangle I've outlined.
The 1 hour chart shows us that price breached the resistance of the descending broadening wedge and then used that resistance as support while it moved sideways. The ascending blue line denotes resistance that price must breach in order to continue higher. We can also see a triangle being formed by RSI. MACD is beginning to build bullishly and %B is in the process of potentially breaching its own horizontal resistance.
The expectation is for a move up to the $7000-$7100 at least, if price can breach the top of the small triangle that it is currently printing. Whether it moves beyond that point is yet to be seen. A breach of the dashed descending broadening wedge would suggest that $7600 would be next up, and then $8000 and $8500 as the fibs denote.
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