Another predictable week has passed
First of all: hope you had a pleasant, though socially distant, Easter. This update is a day late because of it, but nothing much interesting happened around the weekly close, so I felt it would not be a problem to update you after the Easter weekend. I am sure that it is possible to write up some very far fetched theories about BTC doing what it is (or isn't) doing, but I prefer to keep it simple. In last week's post, I mentioned that we would probably get to 7400 with a possible spike to 7500.
Well, it seems that is exactly what happened. It was clear that BTC wasn't ready to break up and these simple Support/Resistance lines, in combination with the RSI and Stochastic are pretty much all I use to gauge the strength of an asset. I will add Bollinger bands and (E)MAs to get more clarity, but as I said: I try to keep it simple. Of course this method cannot predict the outliers, but if you can do that, you would be relaxing on your private island somewhere, not worrying about a thing. So, where will we go from here? Well, nobody knows of course, but if was a betting man (or as we call it: a trader), I would suggest it is more likely that we moved down a trading range than that we had a fake out below the trading range we were in and are now moving back up. Let me show you what I mean:
Some things to explain. The red arrows pointing down, indicate that since July 2019 - on the weekly - we only had lower highs, with the exception of the Swing Failure Point (SFP) as indicated. Now that SFP was a clear indication that a big dump was coming, but admittedly, hindsight is 20/20 vision. I added a hammer to emphasise the importance of that failure to really break the downward trend.
The green arrows represent the weekly lower lows, a pattern that so far also has not been broken. And to be frank, I don't expect it to be. I would say there is a more than reasonable chance that we test the bottom of TR2, maybe even with a wick below, leading to a lower low than the 3100 we saw in December 2018. Talking about the two Trading Ranges (TRs)... To be honest, I haven been very generous with the bottom of TR1. I only feel it is justified based on the levelling off that happened in April 2019. However, more logical might be the following:
In which case it should be clear that we are no longer in the 'old' TR. So, can we climb straight out of the valley from here and follow the green arrow pointing back up to 10K? All will depend on how (and when) the overall economy recovers. At the moment, I am not too hopeful we will see a swift recovery to those levels, however, it is of course never impossible. As always: trade safe, use the charts and not your emotions.
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