Line of Thinking:
We are forming a potential pattern on the 4hr. We are currently moving down forming the right side of the right shoulder after having a failed IH&S on the 1hr. If we close this 4hr candle anywhere bellow $34121 will turn down, and is currently strong with DI- positive and DI+ negative, which makes me think we will at least testing the neckline.
There is some big hidden divergance on most indicators, including the DMI which I often find does not show as much divergance as the others, which leads me to think this divergance should be given good weight in the trade decision. We used up so much momentum to get down here there's nothing close to it on the charts, but we did not make a lower low, which shows the bears are struggling.
The target from this pattern is pretty crazy and sits around $18200. I'm not sure if we will get down that low, but the 21 week is just above that area and I think the old ATH will act as very strong psychological support. If we do make our way to the target, id expect bounces at the levels highlighted (which are also where I would scale out (see TP1)), like we have seen the past 2 days, some of which were around 10%.
is still redlining and will have to come down at some point, which would imply sideways with a slight upwards skew. I've not been able to find a stretch of PA with sustaining this level, so in not sure how to use that. It could mean that due to its mean reverting nature the more it prints red the higher chance we contract and slow down for some time, or it could be a warning as it shows that the market is still going crazy. Maybe its all the new investors who don't have super strong crypto hands pulling funds back out?
I've adjusted my risk due to this huge divergence and the . If the R:R was not 1:4.58 and I didn't have a spot position that I do not touch, I probably would not take this trade. Since I do, its basically a hedge on any further downside.
Entry - $30769 On retest of neckline after breaking through. If the retest moves back above the neckline, depending on the signals at the time I may add on slightly.
SL - $33125 Reasonably big to avoid any stop hunts ruining the fun.
TP1 - $26500 / $24000 / $22600 I will scale out of the trade on the way to the target at the levels in-between.
TP2 - $20000 I don't think we will go lower then the 2017 ATH and I prefer to take profit before the pattern target.
Its hard to know which side will break right now, but im rooting for another correction for long term healthy growth of my hodling bags. Im looking at DOT and UNI right now as ALTs preform well when BTC goes sideways and they have been doing better then most since the dump.
I'm still learning but have been mainly doing 3 - 6 month position trading when the market has major swings.