Hi friends! Welcome to this update analysis on Bitcoin! Let's get right to it! Looking at the four hour chart, you can see that after the rally on the 18th, BTC 1.65% has created a bull flag consolidation. Price was able to surpass the 20 EMA (in blue), as well as the 50 EMA (in orange,) but it was unable to surpass the 78.6% retrace, at about 8686. Now, BTC 1.65% is attempting to confirm the 50 EMA as support, but remaining above that level. With that said, if this bull flag breaks to the upside, and particularly if we surpass the 786, a sharp rally could ensue in BTC 1.65% , which would be likely to cascade through the rest of the crypto space. In fact, you can see that the upside projection from the bull flag (black dotted trendline ) could send BTC 1.65% up to the top of the downtrend channel (in black.) Additionally, you can see that the top of this bull flag , surpasses the high on 3/16, so we technically have a higher high. So, we can see that there is some evidence that is beginning to develop, that supports a technical argument for a continuation to the upside, which would mark an end in the current sell-off.
However, the rally to 3/12 had a similar look, in which price quickly rallied above the 50 EMA , but it failed, and a continuation of the sell-ff ensued. This current move is a bit different, in the sense that we are now forming a bull flag , but we need to be cautious of a failure at the 50 EMA . With that being said, the best thing to do is wait for a breakout of the flag pattern . I know many people will say this seems obvious, but that's what analysis is all about. We identify patterns, we wait for the right setups, and then we trade them accordingly. Now that we have a bull flag , and trading action above the 20 and 50 EMAs, we have some technical evidence to support a continuation to the upside. That's not to say that a breakout to the upside will certainly happen. Bull flags, and every other formation in the world, fail on occasion. That's the nature of chart patterns, and it's why we don't typically trade such setups, until a confirmation breakout actually materializes. Therefore, if we see a breakout to the upside, combined with a rally above the 78.6% retrace, we can expect a test of the top of the downtrend channel (in black.) However, a failure of the bull flag , could send BTC 1.65% to an even lower low than the one printed on the 18th. The odds are greater that we will see an upside breakout, than a downside breakout, but we it doesn't really matter. The percentage gain that could be acquired by trading the flag before the breakout is very small, and the increased risk is very high. In situations like this, where we've been in a continuous downtrend, and we see a quick reversal, it is very important to wait for bullish breakouts, so that you don't get destroyed by bullish patterns that fail.
On the MACD , we're still working over a bullish crossover, and we've crossed over the zero line, which is a technical buy signal. Volume is falling, confirming the consolidation pattern inside of the flag, so we now need to wait for the upside breakout, to confirm the bull flag . Good luck trading everyone!
This information is not a recommendation to buy or sell. It is to be used for educational purposes only.
