Bitcoin: Bearish Divergence and Lower Volume

While I am long term bullish on Bitcoin, I believe $6900 was our local top. I like the idea of starting a short here ($6300=6000), as I think will be heading back down to test support in the $4000-5000 area. I have a few reasons to be bearish currently.

Volume:
Looking at the On Balance Volume (OBV) trend, there's a resistance line starting from June 2019. OBV was rejected by this resistance when Bitcoin hit $6900, which could signal that was our local top as volume depletes for the next few days / weeks.

Bearish Divergence:
On both the OBV and the RSI, there is a very bearish divergence. Both of these indicators are showing higher highs, while the actual price has made a lower high (from ~$9000 - $6000). I highlighted this difference (red trend lines). This gives more credibility to OBV dropping off in the near term, once the indicator starts to correlate to the price again.

Rising wedge:
Highlighted by the pink lines, the rising wedge is a known bearish formation. I will be using a breakdown below this line ($6000) to indicate the best time to enter the short. A break above would be a good place to stop out.

Coronavirus:
I don't think we have seen the worst of this pandemic on a global scale. The way the US is handling the mitigation and suspension of activity does not seem to be enough. This could lead to more extended closures and hurt the entire market overall.

All this being said, I will be looking to pick up more Bitcoin at $5000 and $4500, and maybe even high $3000's if we're lucky enough. I do believe that BTC will end up being an excellent hedge to USD once the government continues to print exorbitant amounts of money to deal with the current crisis. I just think there will be many more sellers as the fear grows.

Happy to discuss any of my ideas presented here. Feel free to ask any questions as well, I'm happy to answer.

-Coinformationist

交易進行

Rising wedge has been pierced, though I'd like to wait for another 4hr candle close below it. It's still possible to make a run up $6300 before testing support at $5700, but there doesn't seem to be much buy volume. A break from $5700 and I'm looking for a bounce in the mid to low $4000's. This is where I would look to long most of my Bitcoin portfolio.

If support breaks there, we could see mid $2000's. We'll see how people react to more country and US shutdowns in the coming weeks.

註釋

Looks like OBV has spiked a good amount. I'm thinking OBV line will get rejected here and prices will break back under the rising wedge.

Above $6900 with OBV continuing to spike upwards would be bullish and a good reason to stop shorting.

交易進行

Still active in this trade. Volume burst through the resistance I highlighted with a red box in the update above, and price followed (to nearly $7000).
We are now at the next resistance line channel, which I believe is a much stronger resistance. I'm thinking we'll now see a big drop off in buying volume, and price to follow to support levels highlighted below ~$5500 and $4500. If volume picks up again, and breaks through channel resistance it would be very bullish.

註釋

As discussed above, trendline held as resistance and now I expect for buy volume to drop to at least the next channel line (green line). I think it'll go to the next channel line (purple box).

As for price targets, still same as above.

Here's a zoom in of the chart. Shows how the volume resistance coincided with price resistance