Bitcoin and the 50D EMA Dynamic S/R
• The 50D EMA is a dynamic S/R level. Meaning that if tested from above, it provides support, and if tested from below it acts as resistance.
• During this uptrend, since December 2022, every time Bitcoin broke below the 50D EMA, the
result was a price decrease of 8% - 12%.
• A combination of an EMA (dynamic support) and diagonal support below the EMA act as a
cushion. Meaning that price depreciation and the time spent below the EMA is less.
Practical application:
1. S/R Trade:
a) Long a touch of the trendline from above with the expectation of a 7% - 10% bounce.
SL is a daily close below the 50D EMA.
b) Short a test of the 50D EMA from below with the expectation of a 7% - 8% drop
(conservative target). Remember that diagonal support below the EMA cushions the fall in
price.
2. Trading Reversals:
You can subtract 7% - 8% from the 50D EMA and look for additional confluence to find a
likely reversal Point in a downtrend.
For Example:
If I subtract 7% from the current level of 50D EMA we get the 0.618 fib retracement at
27,281 USDT.
In this area I have the following additional confluences:
• 26,530 Horizontal Support.
• Diagonal Trendline.
• Demand Zone.
This leads me to an area of a high confluence for reversal. Enough for me to suggest a trade:
Entry: 27,300
SL: 26,300
Target: 33,00
R: R: 1:5
As we progress toward this goal, I will refine the entry and SL.
Don’t enter a trade blindly, wait for a reversal sign such as a bullish divergence and/or a swing failure pattern.
What do you think? Please share in the comments.
Best Wishes.
• During this uptrend, since December 2022, every time Bitcoin broke below the 50D EMA, the
result was a price decrease of 8% - 12%.
• A combination of an EMA (dynamic support) and diagonal support below the EMA act as a
cushion. Meaning that price depreciation and the time spent below the EMA is less.
Practical application:
1. S/R Trade:
a) Long a touch of the trendline from above with the expectation of a 7% - 10% bounce.
SL is a daily close below the 50D EMA.
b) Short a test of the 50D EMA from below with the expectation of a 7% - 8% drop
(conservative target). Remember that diagonal support below the EMA cushions the fall in
price.
2. Trading Reversals:
You can subtract 7% - 8% from the 50D EMA and look for additional confluence to find a
likely reversal Point in a downtrend.
For Example:
If I subtract 7% from the current level of 50D EMA we get the 0.618 fib retracement at
27,281 USDT.
In this area I have the following additional confluences:
• 26,530 Horizontal Support.
• Diagonal Trendline.
• Demand Zone.
This leads me to an area of a high confluence for reversal. Enough for me to suggest a trade:
Entry: 27,300
SL: 26,300
Target: 33,00
R: R: 1:5
As we progress toward this goal, I will refine the entry and SL.
Don’t enter a trade blindly, wait for a reversal sign such as a bullish divergence and/or a swing failure pattern.
What do you think? Please share in the comments.
Best Wishes.
