02/09/2018/14:20CET
Could this be the real deal . BTC and cryptos are showing strength of late despite the dire situation we were in just a 2 weeks ago.
Just as we are sure that the hero is dead, in classic "hollywood impossible recovery" style our hero is rising from the point of no return.
At press time #btc is trading at 7256 usd after a nice saturday trading day with 3% gains.
Today we also visited a high of 7429 usd with a flurry of high volume trading around midday.(see last chart)
This has set the volume bar for today on fire and we still have a good third of the day left to trade. Seeing that most believe that the weekend trading in crytos is dominated by bots, I wonder what this is signaling. What do you think?leave your idea in the comments section below
Let's now take a look at the daily chart to see where we are...
I've marked lines of resistance and support in this chart with lines thickness showing my interpretation of the strength of these levels. Red resistance and green support.
The 6800 usd did act as minor resistance for a few days last week but we got over that pretty well, and the round 7k did not slow btc down much at all.
The next line according to me is a minor level of 7700 usd.
We saw back in late July that this level was visited several time in intraday highs but was rejected each time only to finally after the best part of week breach it convincingly. But alas this was not to last long and we broke back down with not much of support here. In fact the last breakdown also didn't really pause at the 6800 level either weaken it as a rs line.
The 50sma (green) is acting as nice support over the last days with all daily closes being on this line (remember btc trading is 24h and my chart is plotted with daily candles closing out at UTC+2) This looks very nice.
Also the 50sma has crossed the 100sma and the latter is also about to turn positively bias.
Interesting to see but maybe not so vital in chart analysis is that price action has crossed both the 50 and 100sma's when they were making a positive cross over.
I have added an ascending trend channel to define out last 2-3 weeks of price action since btc bias has trended positive.
We currently trade in the positive half of the channel. During this channel we have spent most of our time in the lower half so this is also positive. Again we can see the centerline of the channel shows some correlation to the support and resistance so it is good to see we area on the support side of this line.
Prognosis
Our 21dema strategy had us buy into btc at the 6600-6700 levels so our positions sit on a nice 9% win so far.
Apart from the simple buy and sell on the crossing of the 21dema as the simple version of my strategy states, we can make a more elaborate play here for more profit.
I think starting at 7600 we may see some resistance starting to build in the run up to 7700.
The resistance characteristics we saw back in week 3 of July will not play out again because the run up was quite different. Instead of a crazy 2 bull days, we have had a more gradual and healthier rise to the 7600-7700 range.
Selling part of our position at about 7650 usd may yield us a nice opportunity to buy in again at the low to mid 7k levels where I think we may correct to and find support on the 50sma, or if a harder correction happens, then the 100sma and 21dema which look to converge shortly at the 6900-7000 levels. Worst case is a bounce off the 6800 support line.
If we look optimistically forward, then clearing the 7700 resistance will leave us with a clear path ot 8500 where I expect more serious resistance.
So to paraphrase for buy-in positions, our next opportunity will be in a small correction after a rejection at 7700 and then another at 8500.
I wanted to show you 2 more chart views of btc...
First is the daily but zoomed out some more
We get a better perspective of our support and resistance lines and their magnitude.
It is more visible that 8500 usd and the big 10k are the real battles ahead. 9k also may offer some small resistance but I do not expect much.
Lastly I promised to show the price action of 3h ago that caught my attention...
Trading in the hours ending around midday (again respecting UTC+2) seemed to go a bit mad. Not the regular 2-3 candle clean spikes up or down like you see at around 16:00 yesterday.
What could this be indicating I wonder. There is a story behind this but we may never know what it is.
TIP
This may not be a tip per say, but something I urge all traders and investors to watch for: Anomalies.
Strange things in the chart that are unlike normal price action.
Each trading pair has its own character, this is why studying charts is important. Only when you become intimately familiar with the character of price action in a chart can you start to see anomalies. Spotting them is the first step to reading them and predicting what happens next.
Price action may not exactly repeat, but it rhymes. Spotting the precursors to the rhymes is key to timing trades.
It is a very imperfect science. We look for the slightest signs of patterns that hint trading opportunities to us. Practicing with real money is the only way to do this. Skin in the game is vital to learning
Nobody ever gets it right every time, but this is not the goal. The goal is to get it right more times that getting it wrong.
As always guys, leave comments, have fun and trade safe.