Welcome friends, foes, animals and aliens, my family of crypto lovers, to this one-of-a-kind, oh-so-spectacular update analysis on Bitcoin! Let's get right to it! Looking at the daily chart, you can see that yesterday, BTC printed a large bearish engulfing candle. Today, we're currently seeing some downside follow through, as BTC tests the 200 EMA (in purple.) We're still inside of my designated "no trade zone" but if BTC CONFIRMS below the 200 EMA, we will then be inside of the sell zone. The best confirmation that we could see, would be a breakdown below the 200 EMA, and then a reversal back up, with a failure to get above it. That would be a fantastic sell signal, and I would be quick to enter a short position, under those conditions, with a stop just above the 200 EMA. That's a high probability of success trade setup, and hopefully it will materialize. There are some various support levels going through the sell zone, but a failure at the 200 EMA would likely cause those levels to fall. Similarly, if the 200 EMA is held right here, it could be a confirmation of the 200 as support, which would obviously be a technical buy signal.
I've decided to view the daily chart, instead of the four hour, so that we can get some clean perspective on the broad picture. This view is a clear reminder that we can't lose sight of the enormous head and shoulders pattern, that was formed over the past six months. We didn't see an immediate breakdown after the right shoulder was completed, but that doesn't mean that a breakdown isn't still on the horizon. This market is filled with blindly bullish investors, who completely disregard technical dangers on a regular basis. Don't be one of them. Yes, we've had a rally. Yes, we broken out above the downtrend channel. But the bears are still in control of this market, as you can see by the lower highs on the chart. I highly doubt the bottom is in. I still believe that we could see a breakdown below the red neckline of the head and shoulders pattern. However, we first need to see the 200 EMA fall. That would further solidify the downside theory.
For the record, head and shoulders formations can occasionally rally after the right shoulder is completed, before the breakdown actually ensues. That is a movement that I've talked about in the past, known as a "head test." So, we could just be experiencing a weak head test at the moment, which hasn't even surpassed the highest point of the right shoulder. Regardless, we need to pay very close attention to what happens here at the 200 EMA. It's truly do or die. If BTC holds, and rallies back into the buy zone, that would be very bullish. A failure here would likely be the nail in the coffin for BTC.
On the volume indicator, you can see that yesterday's red bar extends above the previous green bars, showing that the sellers are ready to unload. Also, the MACD is starting to flatten out, as the momentum begins to shift. Interestingly, the last major roll over of the MACD happened at the exact same level, so we may be running into a flat level of resistance here on the momentum (red dashes.)
Keep your eye on the 200 EMA. That's the major level of focus.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-Magic loves you-
-JD-
I've decided to view the daily chart, instead of the four hour, so that we can get some clean perspective on the broad picture. This view is a clear reminder that we can't lose sight of the enormous head and shoulders pattern, that was formed over the past six months. We didn't see an immediate breakdown after the right shoulder was completed, but that doesn't mean that a breakdown isn't still on the horizon. This market is filled with blindly bullish investors, who completely disregard technical dangers on a regular basis. Don't be one of them. Yes, we've had a rally. Yes, we broken out above the downtrend channel. But the bears are still in control of this market, as you can see by the lower highs on the chart. I highly doubt the bottom is in. I still believe that we could see a breakdown below the red neckline of the head and shoulders pattern. However, we first need to see the 200 EMA fall. That would further solidify the downside theory.
For the record, head and shoulders formations can occasionally rally after the right shoulder is completed, before the breakdown actually ensues. That is a movement that I've talked about in the past, known as a "head test." So, we could just be experiencing a weak head test at the moment, which hasn't even surpassed the highest point of the right shoulder. Regardless, we need to pay very close attention to what happens here at the 200 EMA. It's truly do or die. If BTC holds, and rallies back into the buy zone, that would be very bullish. A failure here would likely be the nail in the coffin for BTC.
On the volume indicator, you can see that yesterday's red bar extends above the previous green bars, showing that the sellers are ready to unload. Also, the MACD is starting to flatten out, as the momentum begins to shift. Interestingly, the last major roll over of the MACD happened at the exact same level, so we may be running into a flat level of resistance here on the momentum (red dashes.)
Keep your eye on the 200 EMA. That's the major level of focus.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-Magic loves you-
-JD-