Trading

From the Green to the Red, From the Blue to the $8k!?

Hi,

It’s time to make a little update about the movements on the BTC/USD chart. After my previously made idea post, the price has moved slowly downwards. I would like to talk about some scenarios what is on my mind, what the technical analysis offers and what I will wait for.

At the moment, the price is middle of the range and we cannot do anything. We should wait for trading areas which can produce reversals or breakouts. The first opportunity may come after the price has fallen a bit lower – it has to fall inside the green area.

THE GREEN AREA

The green area consists of several criteria which can potentially turn the price around on a short-term perspective. To be said, in September we might get a pretty important move. The price has started to approach the triangle tip. As said previously, a breakout from the triangle (marked with black trendlines ) can show a mid-term direction but at the moment we have a bit time to the triangle tip and it just slightly increases the likelihood of the bounce from the green support area .
Support criteria area:
1. The round number $10,000 should act as a support, at least historically it has played nicely.
2. In the second half of August, this area worked perfectly as a strong support level .
3. The Fibonacci retracement 62%, pulled from 29. August low to 6. September high. 62% is exactly inside the marked area, matching almost perfectly with the previously worked support area .
4. AB=CD D point is inside the green area. D point can easily end the current short-term downwards correction.
5. The blue minor trendline , waiting for a third touch and it can act as a support. Not a huge sign but it clearly adds some strongness to the area. It is also a bottom trendline from bullish chart pattern called Falling Wedge but as you know, the chart patterns are valid only then when the price has made a breakout of them (Falling Wege upper trendline is the blue dotted line). Actually, that’s why I have this blue arrow on my chart. It gets triggered after the 4H candle close above the bullish chart pattern and above the orange horizontal resistance line.
6. Daily EMA100 should act as a support and it is inside the green price zone.
7. Triangle bottom trendline is the last and the lowest criteria which should act as a support level .
8. I cannot count it to the criteria list but still, I would like to mention it. As you see on the image, the green area can easily be a right shoulder from the bullish chart pattern called Inverted Head & Shoulders . As said, this is not a criterion, this is more like an indication AFTER we have discovered the strong area. Usually, where some traders make mistakes – they search chart patterns and the most important criterion is: “It is a right shoulder and we are ready to go”. No, this is just a possible formation and again, chart patterns are valid after the breakout. Before that, they are just possible formations, possible forecasting or something like that. You cannot trade them without any deeper analysis, I mean you can try it but prepare to get hurt.

So, those were the criteria which make this area worth to look at. When to talk a bit about minuses then I don’t like the 6th of September lower low. Yes, it is a tiny lower low compared with 20. August high but still, I would be more certain about the current support if the price had made the short-term higher high.

How to execute the trade and when to avoid it?
The area is pretty wide so, to trigger the trade, you have to wait for a bullish candlestick pattern. You have a lot of time to wait for it because the area is wide. The only criterion; you have to be patient!
Avoid it: firstly, if you don’t get that mentioned bullish candlestick pattern formation and secondly if the price approaches it really strongly. The most hurtful is to catch falling knives, especially in crypto (panic selling etc.). It is possible but not with this area – criteria count is high but the price action is a bit chaotic and this area is really on the edge.
On the edge? I’m ready to change my bias really quickly after the break below the green area and after the 4H candle close below of it. That’s it when we can’t get a bullish candlestick pattern from the shown area!

THE RED AREA

The red area is the major target after we get a bounce from the green box. At the moment, I cannot call a short from there because currently, I have too low of criteria count. It can offer a pretty good buy opportunity after the breakout but in new posts about this topic and when the time is up.

THE LIGHT BLUE AREA

It can be a window to the $8k. A candle close inside the blue area means a breakout from the triangle and as said previously it can guide us to the mid-term direction, which in that case, is downwards. So, watch out if you see a 4H candle close inside the ligh blue area.

Definitely, if the price starts to make a breakout from the triangle I’ll make updates but at the moment, my eyes are pointed to the green area!

Keep an eye on those boxes!

Regards,
Vaido