Bitcoin Technical Analysis Update

cryptochindian(54)

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Today's daily close resulted in a doji. This usually points to indecision and/or exhaustion, which in my mind signals that the bears are all tired out. If we look at the Tenkan we see that it is finally flat which means that we are no longer in a free fall. This is the first sign that the bottom is in. Next we look at the buying volume that occured yesterday. We see that it is much greater than any of the previous days' sell offs. We also see MACD has flattened and looking to make a weak bullish cross in order to regain ground and return to equilibrium. RSI has successfully bounced off the 26 level and if history tends to predict future price action, we can expect 5873 to truly have been the bottom for this correction. Furthermore, we see RSI is testing the outlined resistance which is the first sign of the bullish recovery.

If we pay close attention to the kumo twist, we see two potential scenarios for BTC. The worst case scenario is that more FUD leads to increased selling pressure and BTC continues to lose ground over the coming days. If the weekly candle closes with a fuller body than it has currently, we could see a retrace of the 23.6 fib which is honestly weak support. Unfortunately at that point I believe we would take a sharp downturn to test the 3k level where there is heaviest support.

The more likely scenario however is that BTC will slowly begin its ascent back up. Its first job is to close above the previous support line now turned resistance. Simultaneously it will have to break out of the current resistance line from its second free fall from 17k levels. When BTC is able to accomplish these two feats, we will look to the beginning of March for confirmation of a new bull run. Referring back to kumo twist we see that the senkou pointed to March 5th as a day where BTC will have the least resistance to break out above the cloud. While this date is not set in stone, other traders who similarly use the ichimoku cloud indicator will use this day as a strong indicator of BTC's trajectory. Therefore if BTC is unable to break through 12.1k by March 5th I will have to reconsider BTC's long term trend.

On another note, the weekly could potentially be saved if we are able to fight our way back up to 8k and close anywhere between 8.1-8.6k. If we do close above 8650 on Sunday night, we will have one massive dragonfly doji. I believe this would be the catalyst to restart the bullrun and potentially allow BTC to break the crypto winter curse that it has been plagued with for years.

The 4 hour continues to shows signs of a recovery. We notice RSI is attempting to regain its footing above the 50 line (albeit struggling). MACD momentum has flattened out along with the Tenkan which indicate some ranging around this 7.5 - 8k level for the time being (until more buying pressure/volume occurs). We notice that price has finally closed above the BB median line at 7440 and will need to stay above this level to add confluence to the recovery. Lastly we see that price wicked to the 50 EMA & the Kijun but was unable to close above it. This reinforces that these two indicators will provide the greatest resistance before attempting to retest the cloud.

Overall we see that BTC definitely wants to make its way back up the ladder but my hunch is that it will be a sluggish ascent until new entrants (i.e. Robinhood Crypto & Co.) bring a new wave of money into the crypto ecosystem.

On to something actionable:

On the hourly however thing are looking great. We saw a bullish divergence at the bottom allowed for the recovery yesterday to close above the key 7.5k level. If we look further we see a hidden bullish divergence (a leading indicator) suggesting that we have strong support for recovery despite the lack of volume. Moreover we see a bullish TK cross and price action that broke above the cloud (albeit a weak move - still bullish nonetheless). Price action bumped its head against the 200 EMA and is trying to find support again on the 50 EMA. Last but not least the flat kumo leads me to believe that this range of 7.5-7.7k will remain over the course of the next several hours until the Kumo hopefully twists bullish with a volume sustained break out.

Optimal Entry: 7261

Likely Range: 7.5 - 7.6k

First Target: 8.5k

S/L: 6985