Bitcoin's been consolidating since my last update. We may be watching the calm before the storm...in a good way...I hope. I've been pointing out for weeks the 4 hour MACD that's been tightening within a wedge. As bitcoin moves closer to the apex, a breakout becomes likely.
The 2 scenarios outlined in my prior update are still very much in play. Let's start with the bullish count....
If my bullish count is accurate, bitcoin completed a WXY pattern. It's now on wave 1 of 5 waves up. I've highlighted the sub-waves in yellow.
Zooming into the 1 hour chart, we can see it's on sub-wave 3, with an approximate target of $7,782. We need to see volume massively increase in order to validate this scenario.
Looking at the 1 hour RSI, we can see an ascending support line has formed. If the bullish count is valid, this support needs to hold at least until sub-wave 3 is complete.
The bearish count has bitcoin in 5 waves down. Wave 4 looks to be nearly finished. As I mentioned before, the support at $6,815 is fairly strong. If this count is accurate, we may see a truncated 5th wave around that support zone. If it does manage to drop below the $6,815 support, the target for wave 5 in this count is approximately $5,856. Here's how it may play out:
The market continues to send MANY mixed signals. Here's just a few...
Looking at the 1 hour RSI and 1 hour MACD, we can see bearish divergence. This may indicate a drop in price is coming.
The 4 hour MACD is also showing bearish divergence...although the 4 hour RSI does not.
The 4 hour Stoch RSI looks oversold and needs a temporary correction to reset.
Zooming into the 30 min chart, we can see a bullish pennant has formed. This suggests a rise in price (at least temporarily) may take place.
The 8 day EMA has decisively risen above the 21 day, which is a sign of a strengthening market. The 55 day EMA is currently acting as resistance. A break above the 55 day would be another very bullish indication.
These are just a few of the mixed signals the market is sending right now. It's clear one could build a case for bitcoin to go on a bull-run, or bear-run in the next few days.
Zooming out and looking at the big picture, you can see it's still operating with the wedge I first pointed out a couple weeks ago. As it moves closer to the apex, we can expect Bitcoin to decisively break in one direction or another.
A drop below this wedge may mean a drop to the $5,500-$5,000 area. Conversely, a break above the wedge would be a very bullish indication, and may usher in the 2018 bull run we've all been waiting for!
**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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