An Interesting Bitcoin TA Chart And Local Price Action Analysis
Updated: Apr 1, 2019
Abstract In this article, I will share with you an very interesting price action on both the daily chart and hourly chart. The analysis will be demonstrated in three steps; I. Pattern recognition, II. Perceiving and III. Conclusion.
I. Pattern recognition
I was playing with the lines on the Bitcoin chart, and found this Fibonacci retracement pattern and trend line:
This chart indicates that the market is coming to shove. If the bulls manage to break above to the downtrend resistance with huge trading volume, people will definitely yell "to da moon", "BTFD", etc. What we're trying to do is to prepare well before that event take place, also, prepare for the fake out. Remember, I am not a gambler but a thinker. Anyone who wants to get a long or short signal should join those telegram signal groups because the basic spirit for us to understand the market is not just producing more enough information for trading, but also shape our minds to be smarter.
Then I zoom in and see another interesting pattern:
Interesting! In the last 12 months the rainbow ribbon had been suppressed the price, and now it supports the price for the first time. In order to explain why this is a very bullish sign, I should pull out the history chart:
In the Bitcoin history, there are at least five times that the rainbow ribbon acted as supports or resistances. All of them led to very powerful momentum runs. But this is not the only "very bullish" sign to me. When I zoom in the hourly chart, I found an even more bullish sign, a diagnosis pattern:
Diagnosis patterns exist only when the crowds' understanding of the market diverge from the market makers'. The patterns normally emerge during the decision phase of the triangle when several candlesticks break out in one direction, then price comes back to the triangle and touch the other side of the triangle after a consolidation process. This is a self-correction process for the market. The pattern above says that "Hey, folks, going down is the wrong decision. Let's go back to the triangle and revoke!"
Let's look at another diagnosis pattern:
Clearly, this diagnosis pattern led to a massive dump! Now I see a bullish diagnosis pattern. But does it mean that we can go to 4.6k? No, and I will tell you why and how to trade it safely. (Notice: This is not a trading advising blog. You should 100% be responsible for your own tradings. )
After the pattern recognition, the first thing we can say is: we're not in a bear market anymore. Because we have evidence such as daily rainbow ribbon bounce, hourly diagnosis pattern and a healthy transaction mode (I will talk about that in the end as a bonus). Yet, we still have little evidence to declare a bull market. So, some strategies are discussed for a tricky market like this below:
A. Buy the dip
The principle of buying the dip is buying the demand zone. The charts below will show you how demand zone works:
As we can see, the price will bounce every time after touching the green zone. This is the zone where we should buy. Also this is the dip, we're looking for, a dip on the demand zone. So the term buy the dip can be specified into buying the demand zone. The first task for us is looking for the demand zone.
1. The demand zone on the market structure
In order to give you a sense of market structure, please watch this video first.
2. The demand zone on the trend line
3. The demand zone on the Fibonacci level
4. The demand zone on the oscillator bottom
5. The demand zone on the support line
B. Buy the break out (Retailers favorite options, which I don't recommend)
The break out of the trend line resistance
The break out of the bottom line of the oscillator
The break out of the oscillator resistance line
To be continued.....(This article will be finished before June. 25, 2019)