Bitcoin 3 Main Market Movements
Bitcoin / Dollar
Let’s imagine you use the weekly chart and Simple Moving Average with period 200 like the line showing you the main trend direction. If so you are still in bullish trend but the market is in a deep correction. The price reached the strong support zone formed by SMA200 and 3000.00 level. We have a reversal candlestick pattern confirming that the price bounced from this support zone . The same confirmation we get from RSI and MACD histogram. It means that the market can use this support zone as a starting point for moving to the nearest resistance zone at least.
As we have lower swing highs and lower swing lows, we can use them for drawing descending price channel . The main line of this channel and 6000.00 level form a strong resistance zone . So, when price reaches this zone after an upward movement which can be within this month, the price action at this zone will show us further market movements. There are following variants:
1. The price bounces from the main line of the descending price channel . We should expect further falling to the support zone at SMA200 and 3000.00 level. it will be done in the borders of the price channel . After that price action at this support zone will show further market movements.
2. The price breaks the main line of the descending price channel but can’t break 6000.00 resistance level . We should expect a sideway movement between 6000.00 and 3000.00 levels. This range will be broken only based on solid fundamental news.
3. The price breaks the main line of the descending price channel and 6000.00 resistance level . It will be a good confirmation for continuation of the main uptrend. When the price breaks out from the descending price channel , the format of the bearish structure will be broken. Moving above the strong resistance level at 6000.00 will give additional confirmation that the bulls have power for pushing market upward. This movement also should be confirmed by solid fundamental news.
How to use this variants for trading:
– use important levels and zones for opening and closing positions based on lower timeframes
– use breakout and reversal signals for opening positions in the right direction following the market
– combine these ideas with your personal research and design a good trading plan for this market.
If you would like to get the same market overview for any other coin, please write in comments the market and timeframe. The most popular variants will be used for a new post.
Source: TW DLavrov