BTCUSD Technical Analysis

BTCUSD Technical Analysis:

Strategy:

My trade strategy revolves around identifying key areas of support and resistance by using Volume spread analysis and divergence to confirm changes in trend and momentum. I am looking for swing trade opportunities that last anywhere between a few days to a few weeks. Whether you are short term investor looking to scalp 10-20% or a long-term holder off Cryptocurrencies and looking for a place possibly to increase exposure and add to your position this analysis is still useful.

Market Commentary:

Since printing a high of 19891 on the 17th Dec 2017 the market has climaxed for the short term and entered a correctional phase. This downside move may seem aggressive however it is simply proportionate to the rally we have experience over the last 12 months trading. As you can see from the weekly chart we are trading around the 38.2% fib area of the overall move higher that we have seen in bitcoin. The correction & phases of consolidation we are seeing is healthy for Bitcoin and will mean future moves higher are more sustainable providing the fundamentals do not change drastically within Cryptocurrencies.

It does not take a genius to work out there is value in BTC based on where we were trading in December 2017 HOWEVER when a currency can easily move 20% in a day timing is key. Let the market confirm the changes in trend and put the odds in your favour. Use risk management to protect your investment capital.

BTCUSD has traded below the daily 200MA today which would normally be considered a value area by larger players in the markets e.g. hedge funds. This does not mean that everyone should jump straight in as there are not any confirmed signals that this market is about to move higher other than some light positive divergence on the daily and 4 hourly timeframes. For now, it is a case of waiting for some strong buying signals. We have support levels below price at 6070, 4900, 3350. I would really be waiting for some confirmed volume entering of these levels before entering. Also expect consolidation once the market finds it feet (sideways trading), not a V-shaped recovery.

I have attached a Weekly, daily and 4-hour chart to share my technical views. Chart annotations are numbered to help with the flow of analysis.

Weekly

1-2 Market climaxes at 19891 on the 17th December. As you can see we have made a 38.2% Fib retracement a very common place for buyers to enter

3-4 MACD cross still bearish and weekly RSI in Neutral territory. No signs of divergence visible with either oscillator.

5-6 We are now trading between the weekly 20 & 40 movingaverage. These MA’s have provide key support for BTCUSD price since inception and are a prime buying area. Backed by the 38.2 FIB you would have to be monitoring price for a confirmed entry signal based on where we are trading.

NOTE: (5) Parabolic SAR has given a Sell signal. SAR dot is above the candle now. (Given how quick this market is I wouldn’t look into this too much as this is a very long term timeframe, I would use it more to give possible clue as to what the next few months have install for BTC.) Main thing to take for now is there is value in BTC price based on where we are trading.

Daily:

As you can see from the daily chart BTCUSD is making bearish Pennant formations:

1a. – 1 Market fails to make a higher High on the 27th Dec 2017. Strong negative divergence visible on the RSI.

2 Again negative divergence visible after failed high.

3-4 bearish cross over 20 & 40 MA on 9th Jan followed by high volume breakout on 16th Jan 2018. SAR signal indicates downward trend change. Good place for shorts.

5-7 As you can see we have recently broken out the 2nd bearish pennant to the downside and are now trading below the daily 200MA. The 4-hourly chart is showing positive divergence (6) and when you back this with the weekly 38.2 FIB level we are trading at and the daily 200MA value zone this gives good reason to assume a reversal in price is close. There has been no climax or high volume reversal yet however I would be monitoring this closely.
Support levels below price have been highlighted. I would expect the next move lower to be towards 6070.

4 Hourly

1. Last 2 consolidation phases have lasted between 2 and 3 weeks. This gives good indication of what to expect if we stabilise at 6070.

2. Market is forming clearer lower lows and lower highs (down trend) we need to see a close above the last high at 13000 to really confirm a change in trend.

3. Strong Positive divergence visible. Leading indicator for trend change higher.

4. Price is trading below the 4 hourly 200MA - Bearish

Expected choppy sideways trading around the daily 200MA 6300 area.

Summary:

-Weekly chart is trading at the weekly 40 & 20MA - long term value buying area.

-Market has made 38.3 Fib of the overall move higher in BTCUSD. Good place for buying to take place.

• Price is now trading below the daily 200MA. Considered as a value area buy larger market participants.

• Positive divergence visible on the 4 hourly and daily charts. Leading indicator bullish trend change is nearby.

• No candle reversal signals yet confirmed with high volume. Best to wait for this before considering entry.

• Expect consolidation to last 1- 3 weeks once price stabilises. Avoid sideways trading if trading short term.

• Support levels below price 6070, 4900 and 3350.

....Update to be added in due course.

Cryptoswan