Technical Analysis: Bitcoin weakens while DOGE and DASH provide some bullish respite

Last week our trend continuation bear pennant pattern completed into the take profit zone. Arguably, a long setup could have been considered when closing a short in a support zone and along our immediate trend line support. However, counter-trend trading a bearish weekly engulfing candle has had limited success this year, so our onus should still be on finding a short setup for a possible next leg down to support.

We find values have returned to a range within prices that had previously consolidated in June and recently in August for two weeks. So it’s fair to assume we can expect similar range-bound trading setups. This means shorting $6620 USD to $6650 USD as a 0.382 retrace and prior support-turned-resistance level with stops above the 0.5 Fibonacci level. This is around $6800 . This trade, I’d argue, does require some trade management, as these levels may tend to invite volatile price “jumps” unexpectedly.

So perhaps setting a trailing stop or multiple take profit zones if the trade setup is valid.

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Daily bitcoin short setup 11 Sep 2018 by Pansyfaust on TradingView.com

An immediate trade one could make, if price fails to manage to enter our uppermost short zone, is a second, more aggressive short condition setup. Should we begin to show price weakness and close a daily candle under $6260 USD or closing outside of the bear pennant formation. If that happens, then look for an intra-day setup to short $6260 USD, stop loss $6410 USD and close the short at approximately $6020 USD. This is a highly aggressive short at these levels, so be prudent with your position size to limit risk.

As of yet, no long condition has activated on Bitcoin, since there are no interesting high time frame bullish divergences in price and oscillators. However, some Alt/BTC pairs have shown movement that can invite some attention, namely Dogecoin and DASH.

Looking at DASH/BTC on the long-term weekly time frame, DASH came right into a historically major demand zone, as prior highs through 2014-2017 that were resistance have become support, and as such, we should trade the trend that it’s beginning to suggest.

Not only that, but the weekly RSI dipped into oversold territory and has exited that zone on bullish price action. The question, now, is where can we enter the trend forming? Price has cleanly bounced and is forming a bullish price structure, making higher highs and higher lows while also invalidating a bearish consolidation zone, which seems to have turned into support (Red/Green Rectangle). To enter this trend while lowering your risk, bidding out the 0.382 Fibonacci at 0.0285 with a stop bellow prior lows at 0.025 should yield a favorable R/R. The daily bearish divergence on the RSI gives us a clue that we can expect a pull back, which can be longed.

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Daily trade setup for Dash. 11 Sep 2018 by Pansyfaust on TradingView.com

For those wanting to ride Doge to a new high, it might be prudent to manage those bullish dreams for now. After consolidating between 35 and 40 satoshis for weeks, Doge exploded upwards while the wider market reclined into bearish price movements. However Doge has come into major resistance, and after forming a bearish RSI daily divergence, it might be the signal to exit a portion of your longs you may have or at least short hedge on Poloniex. A good re-long zone would be 64 satoshis as it shares confluence with a 0.618 Fibonacci and a prior resistance-turned-support zone. If the price does decide to consolidate at these current 90-100 satoshi levels, it’s likely it will push to next resistance at 140-145 satoshis.

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DOGE Daily Update 11 Sept by Pansyfaust on TradingView.com

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Technical Analysis โ€“ Buy when there is blood in the streets

After a strong rally peaking at $8500 during the month of July, Bitcoin fell over 30% to a low of $6250 on Tuesday this week. As brutal as this sell-off was for Bitcoin, major altcoins were punished even more severely over the same period.

Approximate return from 24 Jul – 14 Aug for major Alts:

Bitcoin

Ethereum

Bitcoin Cash

XRP

Bitcoin’s relative resilience in this latest crypto market bloodbath has shown without a doubt that Bitcoin is still the boss! Whilst all major alts have broken below their previous low points for the year, the Bitcoin support level at $5825 has held firm. Furthermore, for the first time this year Bitcoin market dominance is back over 50% (i.e. the value of Bitcoin is greater than the value of all the altcoins combined).

Looking forward, it is critical that the support zone (orange area) between $6020 and $5750 holds. If there is a clean break of this level then it is likely that Bitcoin will suffer the same fate as the rest of the altcoins. There is a support trendline (blue line) which may offer some respite on the way down, but on the back up the recovery will likely be halted by the previous support zone (orange area) which will now act as resistance. This is the bearish scenario (red arrows).



Crypto Bloodbath – Buy When There Is blood In The Streets by tennant.graeme on TradingView.com

The bullish scenario (green arrows) would see the price hold above the support zone and form a reversal pattern of some kind. It is possible we may see an inverse head-and-shoulders forming as indicated on the chart. Should it develop further it could signal the beginning of some sort of recovery. I will be waiting for confirmation of either a break below support (bearish scenario) or a reversal pattern above support (bullish scenario) before placing any trades.

Whilst it is tempting to apply the adage “Buy when there is blood in the streets” and load up on Bitcoin and some unloved Alts, I feel it is prudent to wait until there is reason to believe that the bleeding has stopped before jumping back into the market.

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Technical Analysis: The Bitcoin bull is back!



The Bitcoin Bull Is Back! by tennant.graeme on TradingView.com

What a great week it was for Bitcoin! After a tentative rally from it’s low at the end of last month, followed by some sideways meandering, last weeks price action showed that the Bitcoin Bull still has some bite!

Last week’s analysis highlighted a potential inverse head & shoulders setup with resistance (shaded red) around the 6800 mark. To the delight of Bitcoin bulls, the price smashed through the 6800 resistance to rally approximately 13% to the target price at current levels.

In a bear market, a trader must look to sell the rallies. In a bull market, a trader must look to buy the dips. This completed head & shoulders provides a solid base for what will potentially be the next bull market. As such, we can now view the market with a bullish bias and look to buy with a fair degree of confidence when the market pulls back.

Even more good news for the bulls – we are now looking at an even bigger inverse head & shoulders setup with a neckline at about $7750 USD which itself is a significant resistance zone (shaded pink). Should the price break this resistance zone the target price is just short of $10000 USD which coincides with the next significant resistance zone (shaded orange).

But wait – piling into Bitcoin right now is not necessarily the best move. We are yet to break through a significant resistance level (shaded pink) as well as not just one, but two important, long-term resistance trend-lines (blue lines). Furthermore, on the 4-hour chart there is bearish RSI and OBV divergence (full explanation). As such, if you are wanting to buy (particularly if one is a long-term investor), I would suggest phasing a capital amount into the market rather than buying all at once.

It would appear that the “Bull is Back”, but there can always be a “twist in the tail”. Pick your entries intelligently and make use of stop losses when using leverage or taking large positions.

Look to minimize losses from a potential short-term pull back now because if the price can hold above $6800 USD and then break strongly above $7750 USD, I expect that there will be further opportunities for profitable long trades up to 10000 and maybe even beyond!

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Sentiment analysis: This weekโ€™s top performing coins

There remains a lot of electricity surrounding the alt market this week, but it seems like it’s buoyed by a sort of nervous energy as bullish momentum surrounding Bitcoin falters.

So let’s start there this week.

The relative stability surrounding Bitcoin has disappeared in recent days. After tickling $10,000 USD last week, sentiment around the crypto king has faltered, dropping 43 percent in just four days.

The erratic changes come after a month of relative stability, which buoyed the Alt markets.  The big shifts in sentiment are something to consider, because much of the market still moves with Bitcoin. When it broke down last night, for example, many altcoins lost all of their daily gains.

All that said, the 4o influencers and traders I follow remain bullish on several alt-coins.

If you’re new here, I scrape the social media of the aforementioned cohort of prominent crypto personalities and track when they mention individual coins. I mark down whether they mention them in a positive, neutral or negative light and gather a net score for each coin (+1 for positive, -1 for negative).

You can always find the full list of coins I’ve analyzed at the end of my posts.

Below are charts showing the 10 hottest coins in the last two weeks, and how they got there.

9. (tie) $WTC — +12

9. (tie) $VEN — +12

8.  $WAVES — +13

5. (tie) $ZIL — +14

5. (tie) $SENT — +14

5. (tie) $KMD — +14

4. $ADA — +16

3. $ZRX — +17

2. $OCN — +29

1. $ICX — +34

 

The data

As always, here is all of the data I collected for this piece.

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