Technically Explained: BTC/USD
A Repetitive Cycle, are the good old days near?
Summary
- Repetitive bull hammer formation signifies bull gaining strength, level of USD 4900 expected in the near term
- Medium term outlook signifies a level of USD 2000 if support level of USD 3100 is breached, signified by repetitive trend reversal behavior.
- Stochastic oscillator confirms downward rally to levels USD 3600 in 2 months due to negative divergence from volume demand.
- Change in polarity from Long term support level changing to become a 6- month resistance level,long term outlook signifies optimism with current level hoping to push price away from its mean. Expect a bull rally touching the levels of USD 8500
Short Term Outlook:
Time Frame: Jan, 2018
Analysis: 1 Month
Pattern Behavior:
The coin is expected to form an evening star doji if the next session candle closes at the level of USD 4026. Such a confirmation will lead to an expected evening star doji which signifies a bear rally and the coin will touch the recent low of USD 3700. If the doji is not confirmed the above chart marks the bull hammers by green flag that signifies rising optimism among the investors. The recent bull hammer formed in the last week of March,2019 will act as a base for the coin to touch the levels of USD 4900, a recent historical high. Overall the pattern follows resistance to reversal trend which means as soon as it touches the recent high of USD 4900 a probable bear reversal is expected.
We say: buy for 15 Days
Entry Point: USD 4230
Exit Point: USD 4900
Stop Loss; USD 3730
OR
If there is a confirmed evening star Doji
Short Sell (1 month)
Entry Point: USD 4020
Exit Point: USD 3786
Stop Loss: USD 4100
Indicator
Parabolic SAR and Long-Term Moving Average (50 Days):
Parabolic Stop and Reversal indicates the direction of a trend and suggests entry and exit point
with respect to the distance between the candle and the parabolic line (blue line).
In the above chart the Parabolic SAR is used with a 50 Day moving average line in order to rule out the possibility of false trade signals.
The 50 MA is below the session price for almost 20 days and we say a probable decline to its mean price at USD 3826. The parabolic SAR is well below the candle which signifies no reversals or stop in the sideways pattern that the coin following from the past 15 days.
As the MA and Parabolic SAR is below the candle, the coin will find itself in a down rally with a base at its mean of USD 3826 (50 days). Also the SAR shows no signs of any change in the rally as the SARs are quite below the candle and spread between the SAR and the candle will squeeze as the coin reaches the level less than USD 3900. The trader should play a short for 15 days as the coin will reach its near term USD mean of less than USD 3900.
Medium Term Outlook
Time Frame: July 2018
Analysis: 4–5 Months
Pattern Behavior:
The trend patterns are divided into two phases in the given chart. Phase A shows the bear reversal and then recovery trend noticed after a V-formation. This phase was followed by a sluggish sideways pattern which was noticed for the period between Sept-Nov,2018 (Phase B). The latter phase was then followed by phase A again which saw a V-formation of 117 degrees from its highest high to lowest low, a similar trend angle to the first phase A. Phase B shows a similar trend character both the Phase Bs were experiencing a sideways pattern which shows signs of accumulation and a fear of a big bull or a big bear disrupting such a sluggish trend. The first phase B saw a shocking 48% negative jump from USD 6229 to USD 3066 levels as the trend entered the second phase A.
We fear that if the pattern repeats itself in the second phase B, we might see levels of USD 2200 in the 3 months frame time. The confirmation of such a level will happen only if the current price falls below the support level of USD 3136. If the support level is not breached, we will see levels above USD 5500
We suggest a buy for 3 Months with:
Entry Point: USD 4230
Exit Point: USD 5500
Stop Loss: USD 3680
OR
Confirmation: Levels Below USD 3136, We suggest a sell for 6 Months
Entry Point: USD 3130
Exit Point: USD 1800-USD 2000
Stop Loss: USD 3500
Indicator
Stochastic Oscillator (22=%k, 9=%D)
The stochastic oscillator is used to detect the overbought and oversold regions taking into account the closing highs and lows and added volume indicator helps in observing a positive or a negative divergence from the oscillator
For the period of 22 days, we say that %K line (Blue line) is crossed by the %D (Orange Line) the fasting moving average of 22 days line at a slight Uptick.
A similar pattern was seen in Dec, 2018 where a slight uptick was followed by a downtrend to the levels of USD 3600.
Currently an uptick to the overbought region will push the price down to the levels of USD 3600 as there is a negative divergence marked by the green arrows. This negative divergence confirms a downtrend rally of the coin to the levels at USD 3600.
Long Term Outlook:
Time Frame: Dec,2017
Analysis: 1 Year
Pattern Behavior
The coin reached its all time high in the last week of Dec,17 at USD 19650 and thus sustained such levels for the next month. The drastic sell off volume in the mid jan,2018 hammered the coin to the levels as low as USD 7004 in the first week of Feb,2018. It made its M0arch month high at USD 11432 a whooping 58% change in the resistance level in one month. A similar trend was followed in the month of May where by the resistance level changed to USD 9800. The pattern showed weakening resistance levels and lost bull reversal hope post July,2018. The trend never saw levels of USD 9800 (Resistance in May,2018) after a sharp decline in levels below USD 5800 in Nov, 2018.
The coin saw a change in polarity of its Support and Resistance levels. Change in polarity is a characteristic behavior of a trend whereby the recent resistance levels become the support levels or the recent support levels become the resistance level. The latter one is observed here.
The pattern saw a steep decline in the curve below its support levels of USD 5800, we expect a push back upward to its new resistance levels at making a year high at USD 8400, as the breach of its support level is recent and the bulls may come back in power with a volume surge
Entry Point: USD 5100
Exit Point: USD 8500
Stop Loss: USD 3700
Indicator:
Bollinger Bands: (Period: 31 Days; Std Dev=3)
The current spread between the upper and the lower band is minimal due to a significant mean reverting consolidation in price from the previous breakdown in the month of Nov,2018. The band currently expects an expansion in the spread as the previous expansion in the band was seen at the level of USD 3900, the coin still trades at the mentioned level. This is a strong confirmation as the coin will now either see an upward trend to the levels of USD 7000 in the long term or find support at levels lower than USD 3150. The coin has found a mean reverting price at the current levels from the previous breakdown hence levels above USD 4500 will see a bull run and the investors can enter at the current levels and stop their losses at levels below USD 3700
Note:
The above analysis is highly subjective and the author takes no responsibility for the loss incurred by the readers.
Any idiosyncratic news might affect the coin price.
The indicators used in the article are in accordance to the time frame and coin behavior.
Written as on: 03 April,2019
Raj Goratela
Technical Analyst
