Bitcoin is at a make or break level
Above: Bitcoin (BTCUSD) Daily Chart
Bitcoin’s daily chart above shows two ascending trend lines that create what is known as a rising wedge pattern. Of all of the chart’s existing neutral and bearish chart patterns: rectangles, flags, pennants, symmetrical triangles, descending triangles, head and shoulders, and rising wedge (these are not all patterns, but you should get my point of view) – the rising wedge is by far the most most bearish. The rising wedge also has one of the highest positive expectation rates to become a profitable trade. However, in the rare event that a rising wedge does not result in a drop in price, massive bull rallies often ensue. Bitcoin is currently at one of those make-or-break levels.
Look at # 1 in the table. The green line is the lower trend line of the rising wedge and it is the line that bears want to see the price fall down to shorten. Aggressive short traders close the immediate pause or close below the trend line. Conservative short sellers are waiting for a so-called re-test. Repeated testing of values recently supported or resisted is common. What conservative short traders expect in a rising wedge is for the price to drop below the lower trendline and then back up to see if bulls don’t get back into the rising wedge. If the bulls don’t gather again in the rising wedge, the bears have what is known as an affirmation. The problem for bears on the Bitcoin chart is this: this is the fifth day in a row that the bottom trendline is tested. And the oscillators below tell me that if bulls push Bitcoin back into the rising wedge, we’ll likely see an epic brief push.
The RSI (# 2) is in a transition here. In a bull market, the overbought levels of the RSI are 80 and 90, while the oversold levels are 50 and 40. In a bear market, the overbought levels of the RSI are 55 to 65, with the oversold levels being 20 and 30. The RSI is currently at 58.The previous low of the RSI was almost spot on at 45, suggesting that bullish support has likely been found. The composite index recently exceeded both averages. What we want to see when you are bullish would be the last nail the bears’ coffin carries, the% B (# 3) line, which is above 0.8. But cops have to be careful too. Given that the RSI is currently at 58 when the price move fell below the rising wedge, we could see that the RSI established an upper overbought zone and turned into a short term corrective (bear) move. Confirmation of a short-term bear market would be price action that does not return to the rising wedge with the RSI below 65 and with the% B facing strong rejection when testing the 0.8 level.
Save money on your money transfers with TorFX, the 2016-2020 International Money Transfer Provider of the Year. Their goal is to connect customers with highly competitive exchange rates and unique service, whether they are trading online or over the phone. Find out more here.