Yesterday I posted an analysis of the BTCUSD pair and the price action over the weekend. Today is an update to that trade and a look at the current price area. It is interesting to note how much the buyers want to participate at these levels. It is a very classic BTD (Buy The Dip) trade right now. For anyone who trades equity futures like the ES or the NQ, this kind of environment in BTCUSD is not very different.

  1. The divergence between price and the RSI is still present and has expanded. We continue to post higher highs with an RSI that continues to post lower highs.
  2. There is an ascending channel with a clear top and bottom. We continue to get responsive buying at the bottom of these channels, but also some selling at the tops. What is probably more telling about price at the tops is there is apprehension in the volume at those levels.
  3. We have what is called a ‘tweezer top’. These are the functions of this kind of candlestick analysis:
    1. Two candles, the first bullish and second bearish, are of near equal highs. (some analysts say that wicks should be present, but this is not a rule).
    2. The volume of the rejection candle (the bearish candlestick) should be greater than average and greater than the previous candlestick.
  4. Just like yesterday’s analysis, we have a confluence zone of price and time. These are very important areas for price action where we will see a reversal in trends or a culmination in this current movement. It is equally likely that price will continue to coil upwards before breaking out to the upside with even more momentum. This is very much a buyers market still and we have yet to have a true sell off to find equilibrium.

Things to watch for

  • The channel is very important because it is telling us where a value area is at during increasing prices. Technically, this is an area of consolidation of price momentum. If it continues as is and continues its move up towards the 8500 area, there is a good probability of some buyers stepping in. Watch especially for price to break it’s current ranging behavior in this channel, if it starts to coil up it is more than likely going to break out for more upside movement. If it breaks the ranging behavior and coils near the bottom of the channel, expect a breakout to the downside and then a test of the blue horizontal level.
  • As always, price will move in the path of least resistance, which is to the upside.
  • We do have significant signals for having a bearish bias, but thus far BTCUSD has failed to really care about these signals, buyers are buying every dip. Be careful not to get stuck on a bearish bias just because the signals for a reversal are strong.
  • Remember: The market can remain irrational longer than you can remain solvent.