Falling wedge coming to the rescue? BTC
アップデート済
The price has been steadily dropping these past days, no correction upwards, no signs of a bounce or any kinds of reversal.
Very similar to capitulation (it could very well be, but I don't think we're there yet, unless this drops straight to 3000-2800 from here).
What we aim to catch here is a correction to the upside. Not a trend reversal, just a retracement/correction, which will likely be followed by another drop afterwards, but let's take it one step at a time.
After large drops like we've seen recently, it is highly probable there will be a correction in the opposite direction.
It's just a matter of where it will start and how strong/weak the correction will end up being.
It's difficult to catch it (unless you like catching falling knives) when the market is so bearish, and the panic is everywhere, people looking for even lower prices (which we are still probably going to get, but they're more likely to happen after the correction to the uspide is done).
Why is it worth trying to catch this instead of just shorting? Because it has the potential to easily turn into a 25-30% move from here (while the risk is 2-5%).
It's a lot easier, especially as someone who shares public analysis, to call for more drops, lower prices, and simply go with the overall trend.
Trying to find a counter-trend setup is a lot more challenging and difficult task, which some novice traders may not realize or appreciate.
The best approach in these cases is to avoid using high leverage (or any leverage), and trade using carefully laddered spot buys.
That way you're safe from being stopped out by a wick, but still manage your risk properly and don't go "all in" (which would be equal to gambling).
The analysis:
Falling wedge, bullish pattern, indicating (temporary) exhaustion of sellers.
Bullish divergence on RSI, OBV and MACD (from 1h to 4h timeframes).
Price consolidating at a minor support level (4210-4000).
Negative sides of the setup:
In any case, I'd limit max risk here to 2% (total capital loss in case you get stopped out), or 5% for really agressive traders. Not more than that.
There will be plenty of time to add more to your position once the price confirms the bounce, and shows some strength (so far, zero signs of strength).
In case the price manages to break out of the wedge, then
Targets are:
1. 4649
2. 4825
3. 5100
4. 5339
Best approach here is to either way for a breakout of the wedge, or alternatively wait for the price to come down to the buy zone (the lower the better), and if we see the support holds, enter there with a stop loss just under 4000 (which makes your risk tiny compared to the potential reward).
Risk/Reward = 1:5+
If this setup fails, then this would turn into capitulation and next zone to look for signs of a bounce/reversal will be 3586-3000. That will be a higher probability reversal zone, but I'll post a new analysis if we see the price down there in this move, without retracing upwards first.
Very similar to capitulation (it could very well be, but I don't think we're there yet, unless this drops straight to 3000-2800 from here).
What we aim to catch here is a correction to the upside. Not a trend reversal, just a retracement/correction, which will likely be followed by another drop afterwards, but let's take it one step at a time.
After large drops like we've seen recently, it is highly probable there will be a correction in the opposite direction.
It's just a matter of where it will start and how strong/weak the correction will end up being.
It's difficult to catch it (unless you like catching falling knives) when the market is so bearish, and the panic is everywhere, people looking for even lower prices (which we are still probably going to get, but they're more likely to happen after the correction to the uspide is done).
Why is it worth trying to catch this instead of just shorting? Because it has the potential to easily turn into a 25-30% move from here (while the risk is 2-5%).
It's a lot easier, especially as someone who shares public analysis, to call for more drops, lower prices, and simply go with the overall trend.
Trying to find a counter-trend setup is a lot more challenging and difficult task, which some novice traders may not realize or appreciate.
The best approach in these cases is to avoid using high leverage (or any leverage), and trade using carefully laddered spot buys.
That way you're safe from being stopped out by a wick, but still manage your risk properly and don't go "all in" (which would be equal to gambling).
The analysis:
Falling wedge, bullish pattern, indicating (temporary) exhaustion of sellers.
Bullish divergence on RSI, OBV and MACD (from 1h to 4h timeframes).
Price consolidating at a minor support level (4210-4000).
Negative sides of the setup:
- This support level is not as strong as 4800-4500 was, and the next strong support and a buy zone lies at 3586-3000 area, which is why the stop loss is a must just below 4000, unless you size your position in a way that lets you risk less which would allow you to hold and buy more if it dips to 3586-3000 area. Not recommended, but everyone has their trading style, and if it works for you, then stick with it.
- The wick below the wedge support line would normally render this wedge invalid. The reason why I'm still considering it as a wedge is due to the volume profile (lower volume while the price drops with less and less conviction), shortening of the thrust to the downside, and because that wick does not exist on other exchanges, and neither on altcoin/usd pairs (ETH has this same setup with a valid wedge, no wicks). It makes the wedge questionable.
In any case, I'd limit max risk here to 2% (total capital loss in case you get stopped out), or 5% for really agressive traders. Not more than that.
There will be plenty of time to add more to your position once the price confirms the bounce, and shows some strength (so far, zero signs of strength).
In case the price manages to break out of the wedge, then
Targets are:
1. 4649
2. 4825
3. 5100
4. 5339
Best approach here is to either way for a breakout of the wedge, or alternatively wait for the price to come down to the buy zone (the lower the better), and if we see the support holds, enter there with a stop loss just under 4000 (which makes your risk tiny compared to the potential reward).
Risk/Reward = 1:5+
If this setup fails, then this would turn into capitulation and next zone to look for signs of a bounce/reversal will be 3586-3000. That will be a higher probability reversal zone, but I'll post a new analysis if we see the price down there in this move, without retracing upwards first.
ノート
Still inside the wedge. No breakout yet.If the wedge is going to play out, then we have to see an increased volume breakout within 2-3 days, sometimes by Monday/Tuesday at the latest.
ノート
If the daily candle closes like this, there will likely be more downside.Next area to look for a bounce will be 3600-3500, and if that doesn't hold, then 3200-2900 as a lot more reliable support level.
These moves won't happen in one day, but as long as the price is below 4000, it is a lot more likely to test at least 3600-3500 area.
ノート
3500 area has been tested as expected, since there was no support in between.We have seen an interesting candle today which may indicate the bulls had enough beating and they want to breathe freely for a few days/weeks. This still means nothing unless we see at least one of the previous resistances broken and confirmed as support.
This would be a very constructive move to see with this kind of price action.
ノート
No breakout above the previous support turned resistance.This seems to have only been a test of that and now confirmed as a resistance zone.
Next target would be 3600, and if that doesn't hold (unlikely to hold), then 3066-2900 zone is next major support.
ノート
ノート
First target 3600 reached.We might see a small dead-cat bounce from here, but the chances to continue towards the next target are relatively high.
Might be easier to follow this on the separate chart below.
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