A week of opportunity may lay ahead for Bitcoin
Hope you're having a good day.
I know that many people here are interested in Crypto, so thought I'd share with you the two likely outcomes on what Bitcoin does next so that you can be prepared.
After last week's sell off, Bitcoin has now found support on the 55 EMA represented by the purple squiggly line on the chart below. From here there are two scenarios that will likely play out...
Scenario 1 - Print a daily lower high to change the trend to a downtrend
After the bounce off the 55EMA early this week, the first thing we will need to scout for over the next couple of weeks is a new lower high being set. Look for a double top candlestick formation that forms anywhere below the previous high illustrated by the blue horizontal line in the chart below at approx $57,500. If we print a lower high below that level, a lower high will be confirmed, changing the daily uptrend to a downtrend. Expect quite a fast and quite a nasty move down if this occurs. I've drawn in Orange the most likely path that price action takes should a new daily lower high be set:
Scenario 2 - Break the previous high of approx $57,500 and keep the uptrend going
After the bounce off the 55EMA early this week, it's possible that Bitcoin will now rally to new highs over the next few days to few weeks. Keeping an eye on the daily chart will help us see what happens next. If we get a daily candle close above the previous high represented by the blue horizontal line below, Bitcoin is likely to move up very fast, completely blowing through the $60,000 level. A clue that the uptrend will continue may come in the form of increasing bull volume. Keep an eye on the moving average for volume to see if the volume of buying activity is increasing. At the moment we are only getting a weak bounce off the 55EMA, which is a bad sign, but this can change fast and will likely depend on what happens with the S and P 500. Remember that Bitcoin is heavily correlated to the S and P 500, so if SPY is looking strong, Bitcoin is more likely to find strength and vice versa. I've drawn in Orange below the possible scenario for continuing the uptrend.
How can this information be used?
As you can see, no matter what happens next, Bitcoin's next move in the short term is most likely up. Whether we're going to keep the uptrend going and reach new highs or print a new daily lower high and change trend to a downtrend, Bitcoin will likely move up this week no matter what happens. This presents us with a good opportunity.
Do your own research on this, but a short term relief rally is very likely to occur on Bitcoin from here. A bounce will get people to FOMO back in and get the Twitter hype machine calling for Bitcoin to $100,000. Market makers know this and so I feel it's likely if we are to roll over and change the trend to a downtrend it won't come without some drama first. I'd expect market makers to at the very least tickle that line in the sand level at $57,500 before Bitcoin rolls over into a new daily downtrend.
Let me know what you think.
I find it really hard to explain things on the charts using pictures, so I recorded a video about what I tried to describe above instead. Hopefully you find it useful: