In my previous article we have seen that the Bitcoin was forming bull flags on the small time period 4 hour chart and during the bull flags formation the price action also formed a down channel. And after breaking out the down channel resistance the Bitcoin was forming more bull flags. The price action was being consolidated in next expected flag and now it can be easily seen that the price action has taken another bullish divergence and now we can expect the new bull flag.
Bull flags formation of daily chart:
Now the Bitcoin has turned more aggressive in forming new bull flags even the these bull flags can be seen on the bigger time period chart as well. If we switch to the daily time period chart then it can be easily observed that so far we have received two bull flags and now the 3rd bull flag is expected.
Rising wedge the bearish reversal signal is being canceled:
As we have discussed in my previous article that a bearish reversal pattern is appeared on the daily chart and that is the rising wedge. This is strongly considered a bearish reversal pattern among the traders community but this time the priceline is likely to breakout the resistance of the pattern rather to break down the support. If you look at the chat then a strong bullish candlestick is crossing up the resistance of the rising wedge pattern and this bullish candlestick is also crossing up the 100 in 200 simple moving average resistance levels. And once the priceline will be completely closed above these resistance levels then we can consider a complete breakout from this rising wedge pattern after that the priceline may re-test the resistance of the rising wedge pattern as a support and move up again or there is also a possibility that the price action will turn more bullish and move more up without retesting the previous resistance as support.
However if the priceline of the leading cryptocurrency won't be able to completely break out the resistance of the rising wedge pattern and if it will break down the support then it can be moved up again after hitting the $5700 levels. Because the volume profile of the complete pattern is showing very low interest of the traders below this level.
Is this V shape recovery is warning of Kiss Of Death?
Now let's talk about the situation that most of the traders are talking about and that is the V shaped recovery of the Bitcoin. After strong bearish move the Bitcoin has started a bullish rally that has formed a V shape and most of the traders are thinking that after a strong bearish move this V-shaped rally is a warning to a big drop that is also called “Kiss Of Death” and this expected bearish move can lead The priceline to retest the previous low or it can be moved more down. But if we see the recent bearish rally that was started from 13th of Feb 2020 then during this rally the Bitcoin has formed a price rejection line from where the price action of Bitcoin has been rejected again and again. And finally after been rejected on 9th of April on the second attempt on 16th of April the priceline of leading cryptocurrency has broken out that rejection line. This rejection line was very strong resistance for the Bitcoin now it is working as a strong support therefore if the price line will move down from here then this support will stop the price line to move more down than this level.
Will Bitcoin be rejected by EMA 21 on monthly chart?
Now let's talk about another situation that the traders are talking about. And that is on monthly chart. Here most of the traders are thinking that if the priceline of Bitcoin will be rejected by the exponential moving average 21 then there will be more chances of this Kis Of Death Situation. But this theory is wrong because if we see closely on the chart then it can be clearly observed that sofar the price action did not break down the EMA 21 therefore using the word “rejection” is not appropriate. In fact the price line is getting bounced from this exponential moving average. We would use the word rejection once the priceline completely breakdown this EMA 21 and then it would try to move back and break out this exponential moving average. Even we have a kind of double bottom situation on this EMA on this monthly chart. And we have two more bullish signals. If we see the candle stick of 1st Jan 2020 then it is a strong bullish engulfing and now on the current candlestick that was started on 1st April we can see that this is another bullish engulfing candlestick. Af these two more bullish signals we can expect a powerful bullish move from here.
The Bitcoin has broken out the 100SMA resistance on long term chart:
Now if we switch to the weekly chart then we can easily see that 1st the candlestick has taken a strong bounce from the 200 simple moving average on the weekly chart. And now broke out the 100 simple moving average. After the complete breakout the priceline will have very strong support of these two simple moving averages and it will be easy for the priceline to hit the next resistance level at $12325.
The big bullish Gartley has done its job:
Here I would like to recall the big bullish gartley pattern that has been formed on the monthly chart by the price line of Bitcoin. After entering in the potential reversal zone of this big bullish gartley pattern the price line is getting bounced and moving towards the Fibonacci projection area of A to D leg. Now for the safe trade if you have bought the Bitcoin from the potential reversal zone as I have defined on the chart then you can sell it between the sell targets that I have defined as Fibonacci sequence. But I am expecting that this time the priceline will turn more bullish and will make another attempt to breakout the $12325. However the stop loss is important therefore the potential reversal zone of this bullish Gartley pattern or the 200 simple moving average on the weekly chart can be used as a stop loss.
As per Gartley targets are as below:
Buy between: $7231 to $5424
Sell between: $8654 to $12070.
The bearish theory for rising wedge pattern is likely to be failed this time.
A resistances are converting to supports for Bitcoin.
The bullish journey that was started on hourly chart is being converted to monthly chart that can lead to more powerful bullish move.
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.