Bitcoin's range and possible upside potential

2018년 8월 6일

Good morning, traders. It's Monday and we are back to the charts. Bitcoin moved as I stated it would, in Friday's live stream, if it didn't head up from the point it was at, and spent the weekend trading within a range as it dipped into the $6800 demand zone a few times (~6900 being the 6H S2 pivot). Overnight, the BTCUSD pair challenged the range by closing above it at $7157.93 on the 1H chart, but ultimately fell back. This high was also at the median line of the downward-sloping pitchfork as shown on the 1D chart. A movement above this median line would suggest underlying strength in the buyside.

Price is currently printing a descending broadening wedge after the $8500 high, and more recently is also printing a smaller descending broadening wedge inside of it (denoted by the dotted black lines). We can also see a non-sloping broadening wedge forming as well. This latter pattern at the bottom of such a strong movement down, while not inherently bullish nor bearish normally, gives clues to the significantly diminished strength of the prior movement. It also suggests the lack of strength of the opposite movement as well, thereby resulting in the megaphone pattern without any directional bias. It seems more likely than not that we should see price moving upward sooner rather than later, if only toward the $7060-$7100 area at first. A breach of this level would suggest a test of last night's swing high and a successful breach of this should then see price targeting the 1H box at $7230-$7285. Many time frames are either oversold or are just now moving out of oversold, as well as printing bullish divergences like the MACD on the 1H. I am looking for a higher high in the 1H and 4H OBV to increase probability of further price appreciation.

On the daily, we see price has dipped below the Pivot at $7430 suggesting potential bearish momentum. However, price has printed higher lows and highs since the corrective low at $5755 in June. Therefore, this slight drop below that daily pivot could be nothing more than the next higher low. Until significantly stronger lower movement is recorded, our current position is that this movement is either subwave 4 of wave 1 or it is wave 2. The neckline of the IHS is around the $6750-$6770 area, and this is the most important support level to watch as far as I'm concerned. While a breach below it could still see the current movement as a wave 2, my belief is that anything other than a short-lived venture below suggests further downward movement. Yesterday saw a potential daily reversal candle printed, but we need to see follow through today, in the form of a green candle, to confirm that reversal. I have drawn an upward-sloping pitchfork as well to allow us to watch how price moves in relation to the two pitchforks. As we can see, the point at which they cross at the lower end on August 7th is also the neckline of the IHS. Finally, we can see two ascending black parallel lines denoting the channel that price is traveling in at this time, although further downward movement will see this channel adjusted accordingly.

Make sure you're following me on TradingView as I will be posting a comparison of 2014 and 2018 later today that you have likely not seen and which may have you questioning whether we really have much to be concerned about at this point.