The RSI may be printing a reversal signal in the next week.
A reversal signal also called hidden divergence.
What is a reversal signal? It means that that the current short term trend will reverse and the larger trend will continue.
BTC is on a down trend. Since the ATH on April 14th we've made lower highs and lower lows.
The RSI bottomed out and has been moving in an upwards trend. Price has also moved up with it, but has not broken the downward trend.
So what will likely happen is RSI will make a higher high (above 56.09) while price has made a lower high. ie hidden divergence.
The significance is being able to trade this signal and come up with price targets.
By taking the price as it relates to the RSI levels you can come up with an expected price target. I'll use easy round numbers. I'm also going to assume we at least reach 42k which was a level of resistance earlier in the bull run.
Price Target = Y - (W - X)
30k - (60k - 42k)
Price Target = 12k
This is assuming we only reach 42k, if we retrace higher then the price target is higher.
This is in the ball park for what I said before with the head and shoulders pattern.
I could be wrong. The pattern would be invalidated if we break the down trend and print a higher high. I just don't think that's likely.
At the very least stay cautious and don't get to wrapped up in the bull hype.
A reversal signal also called hidden divergence.
What is a reversal signal? It means that that the current short term trend will reverse and the larger trend will continue.
BTC is on a down trend. Since the ATH on April 14th we've made lower highs and lower lows.
The RSI bottomed out and has been moving in an upwards trend. Price has also moved up with it, but has not broken the downward trend.
So what will likely happen is RSI will make a higher high (above 56.09) while price has made a lower high. ie hidden divergence.
The significance is being able to trade this signal and come up with price targets.
By taking the price as it relates to the RSI levels you can come up with an expected price target. I'll use easy round numbers. I'm also going to assume we at least reach 42k which was a level of resistance earlier in the bull run.
Price Target = Y - (W - X)
30k - (60k - 42k)
Price Target = 12k
This is assuming we only reach 42k, if we retrace higher then the price target is higher.
This is in the ball park for what I said before with the head and shoulders pattern.
I could be wrong. The pattern would be invalidated if we break the down trend and print a higher high. I just don't think that's likely.
At the very least stay cautious and don't get to wrapped up in the bull hype.
Comment:
If BTC can't find support and dumps from here, there is another reversal signal in the RSI. Not as large a drop but would still take us down to 19k, near previous bull run ATH.
