Please note that I am a beginner and I am learning. DEFINITELY NOT INVESTMENT ADVICE. If you spot any technical mistakes, I would be happy to hear about those. Please note, long post ahead.
First: what did I expect?
As you can see from my previous charts I expected a bounce back around 6800-ish and a move to 9014.9. I really don't see a reason to expect anything lower than 6000 at all unlike some other traders, and I will explain why. Let me emphasize: all the respect to the other traders on here, I learned so much from watching your trades so this is not meant as a disrespect at all. On top of that, I could be terribly wrong and the market might crash anyway - what do I know - I just popped up in the TA game lol. It would be typically me if the market starts crashing after this post, lol.
#1 Reason for a Crash: The Death Cross.
I did not believe in this specific death cross. First of all, the death cross is occurring on a 1-day chart. And whilst this can definitely bring quite some consequences, history has pointed out that this is usually for a short period in Bitcoin . Furthermore, I believed that the data that created the death cross was skewed. There was a HUGE pump in December due to a hype, and then there was a quick crash. This was not regular trading that created a death cross pattern, and this should be taken into account. Purely seen from a statistics point of view, the data recorded should be in quite neutral circumstances. Of course something can happen that bumps up a price or down, but seriously - December was crazy!
Another proof for the skewed data is that the 200 is moving along downward now, it actually avoided a cross for a couple of days now on the 1-day chart.
A death cross confirms a long-term downtrend in hindsight. The shorter the timeframe of the chart, the less severe the effect. If you spot such a dead cross on a weekly chart for example, you should expect some drama if there was nothing substantial that caused a deviation in data. However, in this case it was on a 1-day chart so again, it was probably not as strong as a death cross is usually perceived to be. If you look at my 2-day charts you will see it is basically non-existent. However, spotting a death cross in hindsight does not mean it cannot drop lower, it definitely can. It seemed to be however that the 200 on the 2-day chart was strong enough of a support against the drop .
#2 Reason for a Crash: Huge Structures.
Magic if you read this, I love you :'). It is truly a pleasure to read and see your analyses, but I respectfully disagree on this one based on the criteria for spotting a as proposed by Thomas Bulkowski. The is not symmetrical. As he states "The two shoulders should peak near the same price, be nearly the same distance from the head, and look similar (both wide or both narrow peaks)." It should also be "proportional, and not lopsided." Other than that I have no other reasons. Don't hate me chart master :p. I usually trust your analyses BLINDLY. I just did not get this one.
(to be continued in comments story was too long)
Stock RSI 2-day and 1-day chart has a bullish cross over. The DeMarker indicator says bullish too, this is the FIRST clearly bullish sign since February! The double bottom creation is (if I compare it just as strictly to the requirements as I did with the H&S from Magic) perhaps not the BEST one, but it does have a good structure. It is an "adam and eve" double bottom. Guess which one is which ;). Either way, what is encouraging about this double bottom is that the peek volume was higher in the left bottom and lower in the right bottom, which is good! Candlesticks: also good. They have a longer tail and are in both set ups in relatively bullish formations. I could think of better formations but this will do! Furthermore, the MACD seems to be growing towards a cross over as well and giving us bullish signs.
There is a positive side and a negative side to every chart, and this one will not escape it. Whilst I think it is highly likely that we might be forming a bottom, there are a couple of reasons to assume otherwise.
1. If the 200 EMA on the 2-day chart does break, I will not be as positive anymore.
2. Check out Magic's comparison with the SPY. He has a point in that money might not be rotated into crypto per se. I personally think it will - but this is just speculation and based on guessing. Based on his analysis there is no proof for my guesstimate. I think it will but that it is still too early to see how people will react and handle in crisis situations on the fiat markets. In one of my past charts you also see that there is a legit terrifying death cross on the 1 week chart of the dollar index. I am really curious to see how that will play out.
3. If we want to break out we have to go through 2 heavy points. 9014 and 11352 USD.
4. I believe that there still is a slightly scared/negative sentiment because "holy shit" a death cross. Furthermore, I have been studying the media for quite some months now i.r.t. crypto. It is quite biased but also quite powerful. Whatever I think of it, it does drive sentiment.
5. The market cap is very low. It needs to go up for it to thrive and ensure a real bullish movement.
6. Honestly... if it does follow the path that I think it will, I think it might be too fast.. I therefore think that we might form an inverse head and shoulders in the right bottom.
#5 Extra fundamental analysis
The drop in the DJI has been grounded in many technology and financial companies. One narrative that I am seeing in the news is that they "took it too far" and that the blockchain would be a solution for this. That is good news. Also, Blockstream has been rocking it lately. Check their latest updates to discover some awesome developments for bitcoin.
Yes, I extended the right bottom drawing a bit to the right, I was drawing it too tight first.
Again - I am not some genie - I am just studying the rules and applying them and learning along the way. See it as a student assignment or something. I do not claim to know better than the other traders at all, I might be terribly wrong. Even if I have it right this time, I might have it super wrong the next time. The other traders are probably better at this than I am in 99% of the time haha :P There is no 100% streak win at all times possible in trade en technical analysis. Feedback is super welcome, I really want to improve.
1. An inverse head and shoulders in the right bottom.
2. A cup and handle in the right bottom.
3. A cup and handle where the left bottom forms the run up to the cup (so a bigger cup and handle than the one that could occur in the right bottom).
4. A broader right bottom - I most likely drew this one wrong. It is valid for the 2 day chart but not for the 1 day chart at the moment. Actually, if you would want to be able to analyze the chart without the December month in it, with the 200 EMA, you would need to wait until the 19th of July. The endpoint that I drew is somewhere at the end of June.
5. A drop down if it breaks the 2-day 200 EMA. Right now it has kind of kept the thing on its feet.
Also, I want to emphasize again, these are not confirmed patterns, not trading advice and I am not an expert. I'm just having fun looking at patterns and studying them a bit.