BTC is starting to show a few technical signs that it could be preparing for a new move higher, but still needs to jump through a few more hoops to confirm a new uptrend.
The List of Hoops
1. Put in a higher low.
2. Move back above the 50 day moving average.
3. Vortex Indicator turns positive.
4. Main Trend Indicator turns positive.
5. Break the downtrend line.
Put In a Higher Low
BTC has accomplished this first step. The last run up wasn't able to break the downtrend line but when the Main Trend Indicator reversed down, price didn't make a new low. This is positive and puts us on alert to continue to watch how the price action develops.
Move Back Above the 50 Day Moving Average
A key for any healthy trend is for price to move above the 50 day and continue to ride along it on the way up. Currently BTC is sitting below the 50 day, with price needing to move above $6933. You'll notice that a few days ago price tried to move above this point, but was turned back.
Vortex Indicator Turns Positive
The Vortex Indicator has turned positive which is generally a precursor to the trend changing directions. It also tends to lead the Main Trend Indicator by a few days or even a week.
Here's the basic definition of the Vortex Indicator from Wikipedia:
On a chart, VI+ and VI− will be seen to intersect each other at a change of trend, and begin to diverge ever wider as the strength of a trend increases. When VI+ is larger and above VI−, the market is trending up. Conversely, when VI− is bigger and above VI+, the market is trending down.
A trader should focus on the key trend change points of the Vortex Indicator (i.e. the crossing points of VI+ and VI−). When VI+ crosses above VI−, a long (buy) position is indicated. A short or sell position is suggested when VI− crosses above VI+.
Main Trend Indicator Turns Positive
The Main Trend Indicator remains negative, generally this is one of the last indicators to confirm a new uptrend. Typically the price will move above the 50 day moving average and the Vortex Indicator will already be positive. So far we have 1 of 2 in our favor. The Main Trend Indicator is important because we want to trade in the direction of least resistance. When this indicator is working in our favor, our trades have a better probability of working.
Break the Downtrend Line
The last several attempts to move above the downtrend line have failed, but with each attempt the price movement necessary to break through becomes smaller. Now that BTC has made a higher low, it's now visually easier to see the narrowly window. From the chart is appears that the window is about 2 weeks. As BTC progresses, it needs to start moving off of the lower trend line and move above the 50 day moving average. If we can consolidate in this 2 week window with constructive price action, BTC has an opportunity to break the downtrend line and possibly start a new up trend that could last for more than a couple of weeks.
So far we have 2 of 5 hoops cleared! For now we sit back and watch as the trend develops. On the downside, the first point to watch is if BTC closes below $6059.33. This would be another break of the Main Trend line and would likely result in BTC moving towards the most recent lows near $5800.
As the price progresses and we get closer to making it through a few more hoops, I'll update the idea.
Thanks for reading and the support!!
A LIKE and FOLLOW would be awesome.
Best of Luck!!
The List of Hoops
1. Put in a higher low.
2. Move back above the 50 day moving average.
3. Vortex Indicator turns positive.
4. Main Trend Indicator turns positive.
5. Break the downtrend line.
Put In a Higher Low
BTC has accomplished this first step. The last run up wasn't able to break the downtrend line but when the Main Trend Indicator reversed down, price didn't make a new low. This is positive and puts us on alert to continue to watch how the price action develops.
Move Back Above the 50 Day Moving Average
A key for any healthy trend is for price to move above the 50 day and continue to ride along it on the way up. Currently BTC is sitting below the 50 day, with price needing to move above $6933. You'll notice that a few days ago price tried to move above this point, but was turned back.
Vortex Indicator Turns Positive
The Vortex Indicator has turned positive which is generally a precursor to the trend changing directions. It also tends to lead the Main Trend Indicator by a few days or even a week.
Here's the basic definition of the Vortex Indicator from Wikipedia:
On a chart, VI+ and VI− will be seen to intersect each other at a change of trend, and begin to diverge ever wider as the strength of a trend increases. When VI+ is larger and above VI−, the market is trending up. Conversely, when VI− is bigger and above VI+, the market is trending down.
A trader should focus on the key trend change points of the Vortex Indicator (i.e. the crossing points of VI+ and VI−). When VI+ crosses above VI−, a long (buy) position is indicated. A short or sell position is suggested when VI− crosses above VI+.
Main Trend Indicator Turns Positive
The Main Trend Indicator remains negative, generally this is one of the last indicators to confirm a new uptrend. Typically the price will move above the 50 day moving average and the Vortex Indicator will already be positive. So far we have 1 of 2 in our favor. The Main Trend Indicator is important because we want to trade in the direction of least resistance. When this indicator is working in our favor, our trades have a better probability of working.
Break the Downtrend Line
The last several attempts to move above the downtrend line have failed, but with each attempt the price movement necessary to break through becomes smaller. Now that BTC has made a higher low, it's now visually easier to see the narrowly window. From the chart is appears that the window is about 2 weeks. As BTC progresses, it needs to start moving off of the lower trend line and move above the 50 day moving average. If we can consolidate in this 2 week window with constructive price action, BTC has an opportunity to break the downtrend line and possibly start a new up trend that could last for more than a couple of weeks.
So far we have 2 of 5 hoops cleared! For now we sit back and watch as the trend develops. On the downside, the first point to watch is if BTC closes below $6059.33. This would be another break of the Main Trend line and would likely result in BTC moving towards the most recent lows near $5800.
As the price progresses and we get closer to making it through a few more hoops, I'll update the idea.
Thanks for reading and the support!!
A LIKE and FOLLOW would be awesome.
Best of Luck!!
Comment:
The daily chart is starting to take a more constructive form. BTC has moved above the 50 day moving average which means we've cleared 3/5 hurdles. We're still waiting for a break above the downtrend line and for the main trend indicator to turn positive.
