Bitcoin Price Analysis: Follow UP

Bitcoin Price Analysis: Follow UP

Disclaimer: This article is not financial advice. The author is not a financial advisor and this article was not paid for.

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Here’s another perspective:

https://www.tradingview.com/x/ehShVNNO/

Yesterday, people thought that we were on our way to the moon, right?

It doesn’t quite work like that. Understand that price movement is never linear.

“Are you still bullish?”

Hell yeah.

Here’s why:

https://www.tradingview.com/x/49ArlbPU/

From the picture above, you can see that the bulls have once again defended this critical support zone and the price is now being sent in the opposite direction.

Now, even though $6.5k has served as the major overhead resistance (as we’ve identified in previous price articles), it’s worth mentioning that another major resistance/support point was $6.2k-$6.3k.

So, from what I’m seeing — it appears as though the price has broken straight through that point to test that $6.5k point and it is now consolidating back to that $6.2k-$6.3k mark before getting ready to attempt to break through the $6.5k mark once more.

https://www.tradingview.com/x/E3S47p5w/

As you probably guessed from what I wrote on the picture above, this is perfectly fine.

I had to reduce the chart time frame down to the H4 in order to make the point that I was making a bit more visible for everyone (just to be clear).

Now, the only thing to check here is the RSI’s to see whether this resulted in a ‘re-loading’ of the slingshot before the price continues to move up further — or whether it looks like the price may drop down below the support point that it is at currently.

Relative Strength Index(14)

https://www.tradingview.com/x/QQVoky29/

So, as you can see in the chart above, the RSI is nearly in the oversold area — which is positive.

“Did you say positive?”

Yes, because the RSI was just overbought (remember we are in a bear market, so overbought = teetering soon), thus this leads to a short-term consolidation if the price action is still, overall, going to move upward on the daily.

However, if the above scenario depicted is/was not the case, then the price would be ready to fall back down through the floor.

Once again, remember that we are in a traded range, so if the price does break above $6.5k, then it has the potential to really start going stupid.

Looking at Short Positions on Bitfinex

This information is going to tell us a lot about what’s going on and what could happen.

https://www.tradingview.com/x/vegkgRHO/

Shorts are still illogically overextended in their positions at the moment.

That’s just a fact. A 100% gain in shorts and the only minor drop-off of short positions toward the end of this chart here signals that those that are bearish on $BTC #Bitcoin, are beginning to ignore all warning signs.

https://www.tradingview.com/x/et4RALb6/

Perhaps what should be even more alarming to short trader is the fact that the # of shorts on Bitcoin is nearly at an all-time high.

Also, a substantial sum of shorts that were placed on Bitcoin were placed when the price was in the traded range($6k-$6.5k), so the risk of cascading liquidations if the price shoots out from underneath them and suddenly is testing $6.8k-$7.2k (hypothetically), is strong.

And if the price does break through the overhead resistance, this is the most likely consequence for those short positions.

Therefore, the short-sighted attempt to short the currency at this point is not only dangerous but non-worthwhile from a R/R perspective.

Smart money more than likely shorted this coin from $8k+ or the high 7’s and probably closed their position when the price failed to dip below $6k sufficiently (which would account for why the price bounced back up).

Now, let’s check out the RSI(14) on the daily to ensure that that’s still healthy (for bulls).

https://www.tradingview.com/x/SjKKY18I/

The answer is yes (above is the daily RSI).

Conclusion

The pullback/consolidation that is being seen is normal — but one cannot simply ignore the +37 point turn from the ‘bottom’ that the RSI last hit.

This should be considered hidden divergence when accounting for the fact that the price still hasn’t even jumped outside of this traded range while the RSI has been rising the entire time.

Thus, there is still a serious potential for the price to break upward.

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