In my previous article we have seen that on short term 4 hour chart the Bitcoin is forming bull flags since 29 March 2020. In the meanwhile the priceline of Bitcoin also formed a down channel from 6th April to 16th April and finally broke out the resistance of the channel. Now the price is being consolidated between $7500 to $7600 to form next bull flag therefore the BTC is still in next expected bull flag.
A bearish reversal pattern is formed:
Now if we switch to the daily chart then it can be easily seen that the priceline has formed a rising wedge pattern. And among the traders community this pattern is considered as bearish reversal signal because in most of the cases the priceline breaks down the support of rising wedge pattern and turns bearish. But this time I am expecting that price action of Bitcoin will breakout the resistance of the wedge rather breaking down the support let me tell you why.
A price rejection trend line has been broken out:
If on this daily chart we start watching from 15 Feb 2020 then we can observe that there was a downtrend line moving above the priceline. And from this trendline the price line was been rejected again and again. Whenever the price action moved up to breakout this level then it was strongly rejected. Now finally on 19th April 2020 the priceline has broken out the this price rejection line and now this trendline has become the support for the price action of Bitcoin. Therefore if the Priceline will move down 2 breakdown the support of the rising wedge pattern then it will have a strong support of this trend line and it will be difficult for the Bitcoin to break down this trend line support.
MACD and Momentum indicators:
If we see the moving average convergence divergence the MACD indicator on this daily chart then it can be easily witnessed that since the priceline has hit at the resistance of this rising wedge pattern the MACD has turned strong bullish and following the MACD signals the Momentum indicator has also given a strong bullish signals.
What if the Bitcoin breaks down the support of Rising wedge pattern?
In case of breakdown the support of the rising wedge pattern’s support we can expect the further downward move up to $5,700. Because if we place the volume profile on the complete priceline moving within this rising wedge pattern we receive the result that the trader’s interest is weak below $5,700 therefore after hitting $5,700 or moving down this level the priceline can move up again and re-enter in the rising wedge pattern or it may form any other chart pattern.
Bitcoin has broken out the 100 SMA resistance on weekly chart.
And if we switch to the long term weekly chart then it can be easily seen that we have 200 simple moving average strong support at $5,700 that is the same level where we have found the weak interest of the traders on the daily chart as per volume profile of Rising wedge pattern.
In my previous article we have observed that the Bitcoin was struggling to break out the 100 simple moving average resistance. At this time we can see that the candles stick has almost broken out this resistance level but still the tail of the candle stick is touching at 100 SMA. Therefore if the next candle stick completely opens and closes above this moving average level then this breakout will be confirmed. After that the Bitcoin will have the 25 simple moving average and the 50 simple moving average resistance levels but after breaking out the 100 SMA resistance level it will be not difficult for the Bitcoin to break out the 25 and 50 moving averages resistance levels. Because the priceline will have the 100 and 200 simple moving averages support and these moving averages are bigger than the 25 and 50 simple moving average resistance levels therefor pressure from the support will be more stronger than the pressure of the resistance. And after crossing up the 25 and 50 SMAs we can expect that the Bitcoin will make an attempt to breakout the $12325 price level resistance.
The potential reversal zone of Gartley pattern has triggered the bullish divergence:
And here I would like to recall the very big bullish Gartley pattern that has been formed by the priceline of Bitcoin on monthly chart. And at this time the price action has moved up from the potential reversal zone and moving towards next resistance level.
Conclusion:
On daily chart the bearish pattern is appeared but all indicators hand signals are in favor of bulls. The Bitcoin has almost broken Out The 100 simple moving average strong resistance on weekly chart therefore there are more chances that it will turn more strong bullish from here.
Note: This idea is education purpose only and not intended to be investment advice, please seek a duly licensed professional and do you own research before any investment.