BTC looking for weekly higher low
Updated
BTC has is dropping dramatically after slowly grinding upward for several weeks and breaking bear from a rising wedge. It has established its weekly lower high at 7429 and like I said in a previous post I now am looking for it to find a weekly higher low compared to 5858. After that, I would expect to see it continue to tighten on the weekly timeframe, even if that just means a weak bounce for a few days before eventually dropping below 5858. 4hr and 1hr RSI are in the 20s and showing bullish divergence, which has me looking for a bounce sooner than later. The 6150 area has been a support/resistance area several times since June, so that is the area I'm looking at for a possible bounce.
Notice that the bear moves on the chart are becoming steeper after each weekly lower high is formed, while the bull moves are becoming flatter, especially the most recent move that took us to 7429. When we start to bounce, I will need to see higher lows and higher highs on the 4hr timeframe to let me know that the bulls are trying to form a weekly higher low. If bulls are able to change the daily timeframe to higher lows and higher highs I will see that as a confirmation that a weekly higher low has been set.
BTC gives great shorting entries during dumps like this. I like to zoom in to the 15m, 1 hr, and 4hr timeframe after the initial dump has begun. We have seen a nice pattern play out in previous dumps that played out again this time: once the initial violent selloff occurs, the 12/26 EMA on the 15m will act as resistance. BTC likes to reject from these and eventually go lower. Then, I use the 1h 12/26EMAs as a guide for another short entry. If it eventually breaks to new lows, I will wait until it touches the 12ema on the 4h to enter another short. I always take the RSI into account when using this strategy, and I know that in a bear market environment the RSI can get to 20 or lower before considering it as oversold. I also use recent RSI data to help gauge when I might want to exit a short. For the past several months btc has had 4hr rsi levels in the teens before bouncing, and has displayed bullish divergence on the RSI before bouncing. I have also recently paired the RSI level with Stochastic level for better exits.
Notice that the bear moves on the chart are becoming steeper after each weekly lower high is formed, while the bull moves are becoming flatter, especially the most recent move that took us to 7429. When we start to bounce, I will need to see higher lows and higher highs on the 4hr timeframe to let me know that the bulls are trying to form a weekly higher low. If bulls are able to change the daily timeframe to higher lows and higher highs I will see that as a confirmation that a weekly higher low has been set.
BTC gives great shorting entries during dumps like this. I like to zoom in to the 15m, 1 hr, and 4hr timeframe after the initial dump has begun. We have seen a nice pattern play out in previous dumps that played out again this time: once the initial violent selloff occurs, the 12/26 EMA on the 15m will act as resistance. BTC likes to reject from these and eventually go lower. Then, I use the 1h 12/26EMAs as a guide for another short entry. If it eventually breaks to new lows, I will wait until it touches the 12ema on the 4h to enter another short. I always take the RSI into account when using this strategy, and I know that in a bear market environment the RSI can get to 20 or lower before considering it as oversold. I also use recent RSI data to help gauge when I might want to exit a short. For the past several months btc has had 4hr rsi levels in the teens before bouncing, and has displayed bullish divergence on the RSI before bouncing. I have also recently paired the RSI level with Stochastic level for better exits.
Note
EDIT: In the last paragraph I said that for the last several months BTC has had the 4hr RSI in the teens before bouncing, that is a mistake. It should have said in the 20s.Note
BTC bounced from 6119 and gave us a lower high at 6458 on the 4h timeframe. I need to see bulls break above 6458 to be confidant that they are trying to establish the weekly higher low. Currently, BTC is trying to break above 4hr 26EMA. If it can break above, the next resistance I'm looking at is the 1d 12EMA at ~6570. I mentioned in the original post that I expected to see a bounce, even if it is just a weak bounce for a few days, to give us a higher low compared to 5858 before we either break below 5858 or continue up to set a lower high compared to 7429. So far we are seeing that weak bounce in the form of a potential bear flag on the daily. Bulls need to show up soon if they want to try to save the weekly equilibrium pattern.
On this chart you can see the weekly tightening pattern. I have marked each weekly lower high and higher low. Once BTC breaks above 7429 or below 5858 that should give us a clear direction for at least then next several weeks.
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