#5 - All eyes on Bitcoin
If you are a trader you probably already know this but if you're just entering the space, in the current times, the success of this market is really dependent on the success of Bitcoin. As it is the first in this new asset class that is cryptocurrency, it possesses that special attention which is used to determine how everything is moving.
From the two setups that were presented yesterday, currently we are leaning more towards the bearish side of the argument. Remember, this is the bigger picture we are looking at:
This is the largest inverted setup that was previously followed by a number of smaller inverted setups as well.
Is a message commonly referred to in HVF theory which believes that continuation is always the first assumption when analyzing a trend. Previously we have observed that Bitcoin was going down so in case heavy reversal signs are not seen, we can assume continuation, in this case, to the downside.
Yesterday we were looking at a potential rising wedge which is shown clearly below. It was a matter of time until it would break however the important point is how low we would go. The blue box below shows the region we were expecting Bitcoin to bounce in order to form a potential HVF setup. In order to setup for an HVF we need three consecutive highs and lows which decrease in volatility so in case it would bounce off the box, a potential L2 could've been in the makings. Like so:
However, at the current point, we have formed a relative lower low which eliminates the possibility for a HVF setup (at least in the short -term). Obviously it is not expected for Bitcoin to dump right away but I would treat any bullish view with caution at the current point. Remember:
Where was the trend heading before this?
Peace