In the previous post about Bitcoin I used the tools of Technicla Analysis for predicting further price movements. The main idea was that the price reached the up line of the ascending price channel. Mainly, the price reverses from such zones and falls to the middle or trend lines of the channel. But it's Bitcoin and it can do everything and move in any direction against the logic. This time we can look at the market using indicators. Based on them we can see that the price diverges with MACD histogram and RSI. It gives us a trend reversal singal. I should remind you, we have the strong resistance zone not far from the current price which is formed by the up line of the price channel and 5800.00, 6000.00 resistance levels. Based on this information we should expect for price reversal with further downward movement to 5000.00 level, if the price can break 5500.00 level. Why 5000.00 is the good support zone. Based on the 4H chart it's the zone formed by 5000.00, 4900.00 levels and SMA100. If we move to the daily chart, this zone is supported by SMA20. It's logical for the market to drop in this zone after bouncing from the strong resistance zone. Also MACD supports downward movement on the daily and the 4H time frames. Everything tells us about a short term correction. But don't forget that the market is in strong uptrend. This period also can be considered as a consolidation. The market need some rest for accumulating more power for breaking above the strong resistance zone. You should be ready to this also. How to trade in such conditions? I think we must have long positions any way. The market is bullish and in long term we'll make profit having long positions. But we must change our trading volume based on the market conditions. If the market reaches a possible resistance zone, we should fix a part of profit and get free money for new trading opportunities. When the market drops to a possible support zone, we have to open new long positions. This model of money management allows to be in the market all the time and at the same time collect profit time by time.
Wonderfully clear and informative... as always!
Much appreciated. Thank you
FLADING
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Thank you @DLavrov , I'm a beginner and your explainations are very clear!
I just have a small/stupid question...I'm trading in EUR.
Can-I apply your recommendations simply by converting dollar to euro?
If I look on the BTCEUR graph, It looks diffenrent than yours: tradingview.com/chart/?symbol=BITSTAMP:BTCEUR Keep-up the good work
heezy
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@FLADING, I think yes, I also follow the EUR chart. The global movements are the same since the EUR and USD are correlated. But obviously the resistance/support levels are not.
They can be easily deducted by comparing the 2 charts (XBTUSD and XBTEUR)