Bitcoin: The Falling Which Can Mean Nothing
Bitcoin / U.S. dollar BITSTAMP:BTCUSD
The price bounced from the local downtrend line, broke 10 000.00 support level and gave us a strong bearish candle. The bottom line of the triangle chart pattern stopped the falling. This line also acts as the uptrend line for the 4H timeframe. Now the price stays at this uptrend line, and the price action in this zone will be able to tell us something about possible market movements.
As we use the 4H chart, we can talk about medium-term movements. For the long term prediction, we should use the daily and weekly timeframes.
If the price breaks the uptrend line, it will give us a new bearish signal and the target at 9000.00 support. Also, we should not forget about the false breakout which we had several weeks ago. In that time, the market could not develop the breakout into a downward movement. The market did not have fundamental reasons for falling. We saw the reversal and reaching 10 900.00 level.
As the market does not have fundamental reasons for falling now, a false breakout will be possible for such conditions.
If the price bounces from the uptrend line, it will give a new buy opportunity. RSI is going to confirm the price reversal from this zone. MACD histogram is going to support a possible upward movement. This reversal signal is good for buying. But, we don’t have much space for the upward movement. We have 10 000.00 resistance level and the local downtrend line not far from a possible entry zone. So, if you buy based on this reversal signal, be ready to have low risk/reward ratio like 1:1 or even less.
For all buy trades, stop-loss orders must be placed below the local swing low. Profit targets should be at the downtrend lines.
What does this falling mean for the market?
It is funny, but this downward movement can mean nothing. For understanding that buyers or sellers are going to move the market, we will need the signals from higher timeframes like the daily and weekly. Based on the daily chart , we have the triangle and based on the weekly we have the pennant . Breakouts from these patterns will be able to provide more solid signal and tell us more about the market and the further main movement. Please, read about these patterns in posts from the related ideas.
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Source: TW DLavrov