Trading Bitcoin: Bounce to $11k?

Bounce to $11k?

Bounce to $11k? Bitcoin started the week at $11.5k and is now trading at $10.1k. After a steep decline throughout the week, Bitcoin experienced a small reaction rally after bouncing off the 0.382 fibonacci support level at $9.5k. On the daily chart above, Bitcoin’s sequential indicator is on a red 7 of 9 candle. Therefore, we may have two more days of downward to neutral price action according to sequential theory. Additionally, Bitcoin has fallen below the 50MA (gray) which will presumably serve as resistance if a retest of $11k should occur. Also, Bitcoin’s daily RSI is currently at 42 and is not yet in oversold territory.

4 Hour

On the 4 hour chart above, Bitcoin is on a red 1 and is in neutral territory. If price forms a red 2 candle which closes below our current red 1 candle, that is an indication to take a short trade on the 4 hour timeframe. However, until price gives us a red 2, the 4 hour chart remains in a no-trade zone with Bitcoin in neutral territory.

Conclusion

In order for Bitcoin to be bullish on the daily chart, sequential must undergo a price flip to a green 1. Then, price must form a green 2 going above a green 1 which closes above the 50MA (gray). Until then, the overall momentum of the trend remains neutral-bearish with critical support at $9.5k. Bitcoin must not fall into the pattern of making lower highs with a base at $9.5k. If Bitcoin falls into a fatal descending triangle we could see more significant downside price action. We described this tentative descending triangle formation in yesterday’s article.