Dead Cat Bounce or Trampoline?

2021년 9월 18일

There seems to be much deliberation as to whether BTC will see price appreciation from here or whether price support will deteriorate. In 2017 we can look back on the dead cat bounce to see that as the price poked above the 150 day EMA the stochastic RSI was at a maximum while the RSI faced resistance at level 50. It did not find the support at the 150 day EMA that it did have during the rally to the previous ATH.

Today the situation is different. While these technical indicators being different does not determine with 100% certainty that the outcome will be different, it is worth consideration. Currently the stochastic RSI is at a minimum, the RSI is above level 50 and has support at level 50, and the 150 day EMA is acting as support. This is inverted from 2017.

2017: Price tests 150 day EMA from below. RSI is below level 50 and gets rejected from level 50. Stochastic RSI at maximum while attempting to break 150 day EMA.

Now: Price finds support at 150 day EMA from above. RSI is above level 50 and currently finds support at level 50. Stochastic RSI is at a minimum while support at 150 day EMA holds.

If the stochastic RSI can maintain a stable slope upwards that brings it past level 20 with a clear path to exceeding level 80 this will be a setup for a rally. For long prospects to continue we wish to see the price approaching ATH before/ while the stochastic is pushing level 80. We want to maintain support in the RSI at level 50.

Price support at the dark blue trendline is critical and I suspect that it is there. This is where you could put in a long order with a stop loss directly below for maximum return, lowest risk. Even at current price I see the risk/reward ratio as heavily favoring reward.