Technical Trading Exclusive, Technical Outlook, Edition #219 (27/06/2022)
The devil's in the details. Let's see what technical analysis has to say for Bitcoin with the latest coverage of Candlestick Patterns, Momentum & Price Action Analysis 👇
Price Action | Markets bouncing. So why isn't Bitcoin?
For this crypto update, let’s get back to basics in this Technical Outlook with a complete focus on what technical analysis has to say for Bitcoin.
Starting with the weekly view for Bitcoin.
A view of Bitcoin's most recent W1 candle close seems to exhibit a 'Spinning Top' candle.
The Spinning Top is a candlestick formation with a short body, which is generally centred in between the upper and lower wicks. A Doji candle looks similar to the Spinning Top, usually appearing with open and close prices that are almost identical.
The pattern typically points to indecision in the market, implying that buyers and sellers are unclear about which direction the price will pursue next.
In short, the Spinning Top refers to some degree of price neutrality.
Following a sharp increase or decline, spinning tops can also signal a potential trend reversal. Price action theory points to confirmation of a trend reversal or continuation of the subsequent trend in the candlesticks that follow the Spinning Top—or Doji pattern.
In this case, a bullish engulfing would likely provide the basis for a potential reversal, whereas an engulfing bearish formation would likely result in a further continuation to the downside.
Bitcoin vs. US Dollar, $BTC - Weekly (W1)
With this analysis in mind, it seems clear that seller momentum has subsided. Moreover, since the most recent candlestick pattern produced a Spinning Top weekly close, the trend looks to be edging closer and closer to neutral territory.
What happens next will be critical in deciding whether Bitcoin is ready for a bullish reversal—or bearish continuation.
But, having observed the recent bounce in US tech stocks, it would be surprising if Bitcoin's price did not follow...
Nasdaq 100, US100 - Daily (D1)
Smaller timeframes have shown that the bullish micro-structures mentioned in Technical Outlook, Edition #186 still appear intact and now require supportive volume on the retest for $BTC.
Otherwise, this breakout is far more likely to decay.
Bitcoin vs. US Dollar, $BTC - 4 Hour (H4)
A glance at $ETH sustains this line of thinking.
Turning to the H4 chart reveals a relatively 'cleaner' market structure for Ether compared to recent price action in $BTC markets.
However, it is essential to recognise that the fact stands. A qualified bullish reversal will also require the necessary volume to break above resistance and maintain control of momentum to the upside.
Ethereum vs. US Dollar, $ETH - 4 Hour (H4)
"Majestic, yet with might untamed, the wild Bulls gaze. For they long for pastures green."
With more evidence pointing to a potential break in the recent pessimism, the practitioner may begin preparations to respond should conditions tilt favourably.
Before rushing off to execute long positions, it might be worthwhile to consider building a trading plan ahead of any potential buying opportunities.
Here's a link to get some ideas around building a trading plan by watching our most trading video in Charting with Griff, Episode 2 👇
See you again for the next update.
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