Scenario: After a strong rally, BTC entered a surge around the $37,000 mark, breaking through this zone and gaining a new momentum. With the monthly chart aiming to form a bullish pivot, the daily and weekly charts are highly stressed, requiring a correction.
S&P 500: Healthy, attempting to form a bullish pivot on the monthly chart. Strong resistance at 4600 indicates that markets are seeking a correction.
BTCUSDT
Monthly: High, close to the resistance of 42500.
Weekly: High, RSI very stretched (needing correction).
Daily: High, RSI very stretched (needing correction).
Indicators
RSI
RSI Levels
12 and 26 period Moving Averages
Volume
Fibonacci Retracement
Strategy: 1 hour and 4 hours in oversold conditions. Whenever the daily chart enters a strong uptrend, a correction is needed, indicated when the 1-hour chart enters oversold territory (30% RSI). The same rule applies to the weekly chart, with its respective oversold timeframe being the 4 hours.
To confirm this strategy, we can observe that the 5-minute chart in oversold conditions (1-hour correction) and the 15-minute chart (4-hour correction) when entering oversold conditions provided excellent scalping opportunities. Now, the buying force will wait for the 1-hour oversold condition, while the selling force will use the 42500 resistance to take profits.
Using RSI levels, the price range of $40,200 to $38,300 was found, where several buy orders should be defined to obtain the best average price. However, due to the 1-hour chart being highly stressed, the price range found today with RSI levels will not be used, requiring daily updates of the range and order values using the same tool.
The initial stop loss should be set at 37950, slightly below 38000, which is a strong psychological number. As the price range is corrected, the old nearest top will be used as a stop loss.
The first partial should be taken just below 42500 (to ensure our order is executed). I will take a significant profit and raise my stop loss to the entry price. As the weekly chart needs correction, it is expected that the price will fall below 38,000, where we will repeat the analysis and seek oversold conditions on the 4-hour chart.