Iron hands needed to catch BTC's falling knifeGood morning folks!
I've got three charts above. The left chart is BTC/USD 1D, the top right is BTC/USD 1W, the bottom right is the BTC/USD Shorts 4h.
Let's start with the BTC 1D chart on the left: As you can see we opened the new daily candle last night quite strongly with a $250 bounce. This may have happened due to the fact that we had been moving sideways and having a small accumulation phase going on as we bounce on that 886 fib level of $6550. If this new daily candle closes above $6850 the 4 candle could be classified as a bullish engulfing candle, a common bullish candlestick pattern. Obviously this needs to have a follow-up candle that opens higher and shows signs of bullish strength. However, given that we've seen that BTC has done this repeatedly and trick many traders in the past, I'd be cautious. We're also facing resistance from the 9 EMA (pink) right at the $6900 level. That'd be our first resistance to work through followed by the $7000 marker. We'll talk about the other resistance levels when we get to them. The MACD shows that we're creating higher lows and if the price direction overall is going down, this is known as bullish divergence.
Let's couple this with what we're seeing on the weekly chart on the top right. The weekly chart highlights that we're still in the bearish 4 candle on the TD sequential. We still have 2 more days on this candle (close Apr 9th). If we close above $7k in the next 2 days this could signal a reversal. Again, this needs to be followed with strength on the next few daily candles. The 64 EMA (green) on the weekly shows something interesting. We are being supported by it fairly strongly. It supported us the week of February lows. It supported us last week in the $6400 lows. It is now supported us again. This is a good sign. If we break below this, we'll have a ways to go to the 100 MA which would be around $3000 levels. But let's focus on today. The RSI today shows we're at the 44.1 level on the weekly but the last weekly low was Jan 17, 2015 of 28.7. Clearly we've got a ways to go if we fall through this 64 EMA support. Let's hope it holds.
Last but not least, we've got the 4h chart on BTC shorts on the bottom right: As you can see it we had a rising wedge which we broke down from. This could explain some of the rise in price in BTC price. The shorters run out of steam and they liquidate some contracts because BTC starts to jump and it makes them panic. The shorts have fallen out of that rising wedge and are also now posting a bear flag. If they fall out of that flag this could be a sign that BTC may reverse as people are not feeling confident that BTC will keep falling. However, the argument could also be made that this move is to let the indicators cool off on both the BTC/USD positions as well as the shorts to drop harder from here. All in all, we are still in an overall bear market. The market sentiment is slowly shifting momentum. The talks of the SEC contemplating Bitcoin ETFs, George Soros allowing his fund to trade cryptocurrencies, USD pairings may be available for crypto trading soon, Coinbase and Circle acquiring Poloniex to be SEC regulated exchanges for trading. This is a good start for the momentum shift. We now need to see this be followed up with volume coming in, price showing reversal on Bitcoin and major alts. For now, our scenario still holds that we are looking for a bottom and have not found it yet. Meaning, this could all be noise in a larger move that will be taking us further down. Let's see what King BTC says over the next few days.
Cheers and happy trading!
