Let's imagine that you use the weekly chart and the simple moving average with period 200 as the line that shows the direction of the main trend. If so, you are still in an uptrend, but the market is in deep correction. The price reached the strong support zone formed by SMA200 and the 3000.00 level. We have a reversal candle pattern that confirms that the price bounced in this support area. The same confirmation that we get from the RSI and MACD histogram. This means that the market can use this support area as a starting point to move at least to the nearest resistance zone.
Since we have lower oscillation maximums and lower oscillation minimums, we can use them to draw down price channels. The main line of this channel and level 6000.00 form an area of strong resistance. Then, when the price reaches this area after an upward movement that may be within this month, the price action in this area will show us more market movements. There are the following variants:
The price bounces off the main line of the descending price channel. We should expect a further fall in the support area in SMA200 and 3000.00 level. It will be done in the limits of the price channel. After that price action in this support area, more market movements will be shown.
The price breaks the main line of the descending price channel but can not break the resistance level of 6000.00. We should expect a lateral movement between 6000.00 and 3000.00 levels. This range will be broken only based on solid fundamental news.
The price breaks the main line of the descending price channel and the resistance level of 6000.00. It will be a good confirmation for the continuation of the main bull trend. When the price is separated 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 the power to push the market up. This movement should also be confirmed by solid fundamental news.
How to use these variants for trade:
Use levels and important areas to open and close positions based on lower time frames
use breakdown and reversion signals to open positions in the correct direction following the market
Combine these ideas with your personal research and design a good business plan for this market.
tell me what's your take and your prediction on bitcoin.
resteem and upvote and comment on my post if you found it helpful.
