Bitcoin's retracement as potential cause for bullishness (2)
Good Tuesday morning, traders. Price is doing what I mentioned that it needed to do last night -- retracing. Buyside needs the time to recollect itself before another push upward. Failure to do so results in a failed push and lack of energy for the buyside to negate the effects of the sellside which could see price falling further downward. Retracement is an important step in bullish momentum.
As we discussed last night, price breached the 2 month old resistance this weekend and then followed it up with an inside bar on July 1st and confirmation via the bullish engulfing candle on July 2nd. This is a technical sign that price is primed to continue upward. Furthermore, we can see that daily price action has created a descending broadening wedge with four alternating touches of resistance and support which gives us reason to believe a breach of the upper resistance is in the works. The retracement should give buyside the energy to follow through with this breach and continue upward. This is all in addition to the weekly which shows tweezer bottoms (an indication that price reversal is occurring).
The 1h chart shows us that a possible bearish pennant is being formed. The low of that pennant found support at the previous swing high of June 29th. A breach of the lower support of that pennant could see a potential ABCD pattern printing. This would find price dropping to the short dotted horizontal line and ultimately finding support along the ascending dotted line. That would give price a retracement of around 38.2% on this latest push up as well as place the retracement bottom within Wave 4 of the previous 5 wave movement. To be fair, I don't like price only retracing to that level. I would much rather see a retracement toward $6350-$6470. This would give buyside the best chance of significant upside progress. In addition, price would have the opportunity to retest the prior 2 month long resistance as support.
As shown in the 6 hour chart, Wave 4 is within the horizontal orange channel so the aforementioned lower levels of retracement that I would like to see would be possible. This means that if the previous movement up is a legitimate 5 wave set (larger Wave 1), then this current price action is the correction (larger Wave 2) leading to the next 5 wave set (larger Wave 3). Price finding a bottom for this retracement in the orange box would be more evidence of this being the likely case. In such a case, we would then expect the next wave up to target the 1.618 extension at around $7238. RSI is running a bit hot on most time frames, but if this the beginning of the reversal then that is expected and we should see price continuing upward anyway as the bullish momentum takes over and pushes price harder.
As we discussed last night, price breached the 2 month old resistance this weekend and then followed it up with an inside bar on July 1st and confirmation via the bullish engulfing candle on July 2nd. This is a technical sign that price is primed to continue upward. Furthermore, we can see that daily price action has created a descending broadening wedge with four alternating touches of resistance and support which gives us reason to believe a breach of the upper resistance is in the works. The retracement should give buyside the energy to follow through with this breach and continue upward. This is all in addition to the weekly which shows tweezer bottoms (an indication that price reversal is occurring).
The 1h chart shows us that a possible bearish pennant is being formed. The low of that pennant found support at the previous swing high of June 29th. A breach of the lower support of that pennant could see a potential ABCD pattern printing. This would find price dropping to the short dotted horizontal line and ultimately finding support along the ascending dotted line. That would give price a retracement of around 38.2% on this latest push up as well as place the retracement bottom within Wave 4 of the previous 5 wave movement. To be fair, I don't like price only retracing to that level. I would much rather see a retracement toward $6350-$6470. This would give buyside the best chance of significant upside progress. In addition, price would have the opportunity to retest the prior 2 month long resistance as support.
As shown in the 6 hour chart, Wave 4 is within the horizontal orange channel so the aforementioned lower levels of retracement that I would like to see would be possible. This means that if the previous movement up is a legitimate 5 wave set (larger Wave 1), then this current price action is the correction (larger Wave 2) leading to the next 5 wave set (larger Wave 3). Price finding a bottom for this retracement in the orange box would be more evidence of this being the likely case. In such a case, we would then expect the next wave up to target the 1.618 extension at around $7238. RSI is running a bit hot on most time frames, but if this the beginning of the reversal then that is expected and we should see price continuing upward anyway as the bullish momentum takes over and pushes price harder.
