Deconstructing Charts: BTCUSD with a little bit of ETHUSD
BTCUSD seems to failed once again today to reclaim the trendline as support and we are now seeing more indications of a downtrend developing.
1. Price Action: After printing a significant red candle last night, BTCUSD seemed to as it was going to rally back up printing a nice bull candle during the day today. However, that candle was quickly stopped by the previous support trendline which is now acting as resistance.
2. Head and Shoulders: It looks like BTCUSD has pierced and now managed to successfully close a candle below the neckline of the head and shoulders pattern. As we mentioned yesterday, the neckline of this head and shoulders is coinciding with the trendline previously mentioned. It is important to note that If BTCUSD were to confirms this head and shoulders by piercing and closing below its neckline (purple dotted line), it would also be piercing our very important support trendline, which could indicate a reversal and new downward trend given the bears control.
3. Moving Averages: For moving average, I typically like to use 20 MA (purple) along with the 50 (yellow), 100 (orange) and 200 (red) EMA . As we mentioned yesterday, on the 12 hour timeframe 50 EMA (yellow line). However, it looks like price wants to retest this level again tonight, and if it fails to hold we could see the bears take BTC down to around 32K area.
4. Volume: Today we saw volume increase a bit more but it was mostly controlled by the bears.
5. RSI and MACD: When the all-time high was create back in Jan. 8th, it did so by making a very clear bearish divergence in the RSI , which was quickly followed by a selloff causing RSI to fall and test the 50-level area. Today RSI fell below 50 and could not come back above after a brief rally up. For those not familiar with RSI , many traders consider the 50-level area to be the midpoint between Bullish and Bearish conditions. RSI above 50 indicates buying while RSI below 50 indicates selling. Shifting our attention quickly to MACD , there is a clear death cross that occurred after hitting our all-time high and we have been trending down ever since.
6. ADX and DI: After forming the peak of our right shoulder, we saw DI- cross up on DI+ (red crossing up on green line) with ADX (black line) falling below 20 level, this could be indicating our uptrend coming to an end or we could see some sideways action until a new trend is established.
As mentioned in the video, we continue to see more and more bearish signs appear on the charts for BTCUSD, however we have to be cautious this isn't a bear trap as its not unusual for BTCUSD to make this types of moves. Right now if you are long, its wise to review those positions and ask yourself what course of action is best suited for you trading style.
P.S please remember these are just ideas and not trading advise.
1. Price Action: After printing a significant red candle last night, BTCUSD seemed to as it was going to rally back up printing a nice bull candle during the day today. However, that candle was quickly stopped by the previous support trendline which is now acting as resistance.
2. Head and Shoulders: It looks like BTCUSD has pierced and now managed to successfully close a candle below the neckline of the head and shoulders pattern. As we mentioned yesterday, the neckline of this head and shoulders is coinciding with the trendline previously mentioned. It is important to note that If BTCUSD were to confirms this head and shoulders by piercing and closing below its neckline (purple dotted line), it would also be piercing our very important support trendline, which could indicate a reversal and new downward trend given the bears control.
3. Moving Averages: For moving average, I typically like to use 20 MA (purple) along with the 50 (yellow), 100 (orange) and 200 (red) EMA . As we mentioned yesterday, on the 12 hour timeframe 50 EMA (yellow line). However, it looks like price wants to retest this level again tonight, and if it fails to hold we could see the bears take BTC down to around 32K area.
4. Volume: Today we saw volume increase a bit more but it was mostly controlled by the bears.
5. RSI and MACD: When the all-time high was create back in Jan. 8th, it did so by making a very clear bearish divergence in the RSI , which was quickly followed by a selloff causing RSI to fall and test the 50-level area. Today RSI fell below 50 and could not come back above after a brief rally up. For those not familiar with RSI , many traders consider the 50-level area to be the midpoint between Bullish and Bearish conditions. RSI above 50 indicates buying while RSI below 50 indicates selling. Shifting our attention quickly to MACD , there is a clear death cross that occurred after hitting our all-time high and we have been trending down ever since.
6. ADX and DI: After forming the peak of our right shoulder, we saw DI- cross up on DI+ (red crossing up on green line) with ADX (black line) falling below 20 level, this could be indicating our uptrend coming to an end or we could see some sideways action until a new trend is established.
As mentioned in the video, we continue to see more and more bearish signs appear on the charts for BTCUSD, however we have to be cautious this isn't a bear trap as its not unusual for BTCUSD to make this types of moves. Right now if you are long, its wise to review those positions and ask yourself what course of action is best suited for you trading style.
P.S please remember these are just ideas and not trading advise.
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