Bitcoin price had left the market deflated after a strong correction of the promising rally. Today, some of the energy we saw during the advance returned to chart, as CNY exchange traders started probing the upside again.
Time of analysis: 15h32 UTC
From the analysis pages of xbt.social, earlier today:
The support at ~$300 and 1800 CNY (grey horizontal support & resistance) has held so far.
In the 4-hour chart, MACD is approaching ascending above its signal line – though still below its zero-line. RSI reverse diverged to a previous high while price, simultaneously, tagged the 20MA (green arrow) at the 4-hour timeframe.
The price pattern down from last week’s top continues resembling previous corrections during the rally (only much larger, of course). This notion may be invalidated in the days to come, but while it remains feasible, price seems to be continuing the corrective pattern as it now bounces along support prior to resuming advance. A comparative example is circled to the left of the chart.
Accordingly, we have three immediate scenarios:
1) $300 continues supporting price trading above both the 20MA and 200MA in the coming days – a bullish chart condition.
2) $300 holds and price pushes higher in a correction – this is unlikely to yield a buy signal at the 1-hour or even 15-min timeframes. It is generally not a good idea to trade such a corrective wave since it looks to be advancing but will inevitably return to $300 – and unexpectedly.
3) $300 is breached and we see a sell signal – possibly first in the 15-min chart.
That cotton trade was almost the deal breaker for me. It was at that point that I said, ‘Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?’ – Paul Tudor Jones
For now it looks like price is either on its way back to lower support at $300 and 1800 CNY, or perhaps pausing prior to a push above the 20MA in the 4-hour chart.
Unless there is an ignition in either direction, the chart is likely to be uneventful in the coming days as price action goes through the motions of sideways correction (or base building, we hope).
Bitfinex orderbook depth and Buy/Sell Volume:
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Bitcoin price charts from TradingView.
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