Bitcoin's drop over the last 24 hours was not as all surprising. If you've been following my updates, I pointed out the bearish rising wedge, and explained how a temporary drop was likely. Both my bullish and bearish counts called for the drop...the question is, which scenario are we in?
My bullish count has bitcoin in wave 2, of 5 waves up.
Wave 2 is looking for a bottom. Zooming in, you can see bitcoin briefly penetrated the 0.382 fib level. I believe there's a good chance it'll drop to the 0.5 fib before a bounce. Here's how it may play out:
The bearish count has bitcoin in 5 waves down. If accurate, this latest drop was the start of the 5th wave. The target for wave 5 is approximately $5,968. Here's how it may unfold:
The 4 hour MACD and RSI, are both showing bearish divergence. This may indicate a further drop is coming.
The 4 hour chart shows the 8 day EMA has crossed below the 21 and 55 day EMA...an indication of a weakening market.
On the daily chart, a bull market will have the 8 day EMA on top, the 21 day EMA in the middle and the 55 day EMA on the bottom. The 1 day chart is currently showing the 8 day on the bottom, 21 in the middle and 55 day EMA on top. They're also extremely fanned out from each other. This is rather bearish, and shows bitcoin has a long way to go before it's in a true bull market.
In order to continue the slow uptrend we've seen over the past few days, bitcoin must remain above $7,340. Dropping below would be another indication of a weakening market, and lend credibility to my bearish count.
Continue keeping an eye on the wedge that's developed on the 4 hour MACD. As it approaches the apex, a major move up or down may occur.
A few days ago, I pointed out 4 major areas of resistance bitcoin needs to break through. It's approaching the first. There's also a strong ascending support line making this slow uptrend possible. One of these is going to break in the next few days...maybe a week at most. If the support fails, the next area of strong support is at $6,815.
Unless you're a skilled day trader, I'd sit on the sidelines with a wait and see attitude. Don't let FOMO cause you to make a poor decision. There will be plenty of opportunity in the future. If you do decide to enter a trade, consider keeping your stop-loss tight. As always, this is just my opinion, not financial advice.
The next 3-7 days should be interesting. Let's see how it play out.
BIAS:
Short Term: Neutral
Longterm: Very Bullish
I hope this has been helpful. I’d be happy to answer any questions in the comment section below. Thanks for stopping by.
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Disclaimer: I am NOT a financial advisor and this is NOT financial advice. Please always do your own research and invest responsibly. Technical analysis is simply a guide. It doesn’t predict the future. Anyone that claims they know exactly what’s going to happen is foolish, lying or both. Technical Analysis should only be used as a tool to help make better decisions. If you enter a trade, I recommend having a stop loss and sticking to it. You will loose at times. The key is to have more wins than losses. With that in mind, I wish you great success.
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A recovery. I had to post it, based on the title. If it does swing below 6k I guess we will see some real action.
Should be an interesting week.
Imstrongly believe it stay at the trend of 7.3k above as it is currently trying to break a v trend. My view but it may not be true also. Recently found it interestimg to play with the up and down trend . But i just predict from others prediction.
Thanks for stopping by @steemfuture
What's with the bearish divergence ahead of this morning's rally? Very hard to predict, this is random behavior on steroids. Now what?
I was a little late noticing the bearish divergence. Still, it did drop another $140 to $7,370 before it started rallying. I'm going to try to post an update soon.