Bitcoin — very hot cup & handle OR a drive to $6800? #28April
Price targets for BTC using the rising channel, 3 drive reversal pattern, cup & handle formation
Hello folks! A new week has begun and we are back with more analysis, also if this is your first email from us, make sure to read about us here. Also, be sure to check out all the previous posts to get the full picture. Without further ado, let’s move on to today’s analysis.
Price levels overview for today
- > $8200: We are on our way to $8800(rising channel upward breakpoint)
- $8200: Cup & handle target, point 3 of three drive reversal pattern(look for rejection here)
- $7500: The typical handle rejection point of 2HR Cup & handle pattern(good for long scalp entry)
- $7200: Long term support line, break of which will take us to $6800(3 point reversal bottom target)
Please make sure you read the full article for a better understanding of the above price levels.
Cup & Handle on 2hr indicating higher price
A cup and handle price pattern on bar charts is a technical indicator that resembles a cup and handle where the cup is in the shape of a “U” and the handle has a slight downward drift. The right-hand side of the pattern typically has a low trading volume. A cup and handle is considered a bullish continuation pattern and is used to identify buying opportunities.
Our twitter friend has identified a cup and handle pattern in the 2 hr timeframe which has the potential to drive us to $8200.
How to trade OBV?
The on-balance volume (OBV) is a technical trading momentum indicator that uses volume flow to predict changes in stock price. The chart below shows the ideal way to use the OBV indicator to predict price actions. As mentioned by the following twitter user it was on an uptrend before breaking to the downside. Although, he was expecting bitcoin to slide down to $7400 it hasn’t happened until now.
Rising channel(Not so sure)
Since the drop, Bitcoin has formed a pattern resembling a rising channel and has tested the top of it thrice until now. Currently, it is fighting with the middle line. Once the rising channel pattern is broken, price usually drops violently, but first and foremost we need to be sure whether this pattern is valid or not before jumping into any conclusion.
Two things should be considered when justifying a rising channel -
- the volume should be decreasing creating a price/volume divergence
- The price level should be below 50% Fibonacci level
In this particular case, the volume is decreasing while the price is increasing which satisfies the first point but we are currently above the 50% Fibonacci level(which is located @ $7200) thereby not holding the second true. So, as long as we can stay above $7200, price should test the top of the rising channel currently located @ $8100, which would then be taking the number of times testing the channel-summit from three to four.
Bollinger band long-term story
Moving on to the Bollinger band analysis, let us now take into consideration a broader time frame(weekly). Currently, the price is flirting with the Bollinger band baseline after we have posted straight gains for 6 weeks after the drop. Weekly MA99 is also converging with the same price as the Bollinger band baseline. So if we can close this week’s candle above these two resistances we should see more upward price movements.
We will continue this analysis in the upcoming posts so be sure to keep an eye on your inbox.
Support & resistance line analysis
According to the following analysis, the price is fighting with the resistance line that Bitcoin has formed in the past few weeks, and now if we get rejected by that resistance line we should be on our way back to test the long term daily support line located @ $7200.
Flashing of the 3 drive reversal pattern
3 drive reversal pattern is a three-point pattern. The price makes an initial high at point 1, this is the first drive of the pattern. Price then retraces before making a new high at point 2, forming the second drive. This second high should also be a 127% or 161.8% Fibonacci extension of the first drive. The price then retraces once again and makes a third drive up which should also be a 127% or 161.8% Fibonacci extension of drive two. It is this third drive that you want to pay the most attention to as this is where you are looking for a short entry.
We have formed an exact same pattern on the 2-day chart in Bitcoin. Look for a rejection around $8200 for the pattern to be confirmed.
AAaannnd that’s a wrap for today! Please always keep in mind that absolutely NO part of this write-up is trading advice and you should always trade at your own risk. We would continue to bring more such analyses to you every day, till then please share and subscribe to our newsletter and happy trading! Also please go through our previous posts to get the full picture. Ciao!
