Price action this week has re-affirmed my thesis that we’re still in a range-bound Bitcoin trading zone. After taking longs between $6200 USD and $6120 USD, our trades scaled out at the upper range bound zone from $6620-$6650 USD. In hindsight – as is always the case – we lost out on profit by setting our take-profit too conservatively. Consequently, we’ve updated the resistance range to $6800 USD (0.5% Fibonacci level), with the support range still between $6200 USD and $6120 USD.
As for overall sentiment, we’re still deep in the bear-infested woods, with prices rapidly routing all gains made. A daily close above $6700 was the first sign of a possible bullish reversal; instead, Bitcoin has made another lower high at $6840 USD, which does not give much hope for a retest of the high until we retest the lower support range. As said before, the more a level is tested, the weaker that level becomes. There is a long-setup on the local trendline support at around $6250 USD; however, I do believe its usefulness has been spent. Truth be told, if the market is simply the etchings of human behavior, the market is saying that the bounces are getting smaller because buyers are increasingly not committing to a level. Volume, bounces, price action, market structure; the chart just makes me “feel” like if we continually trend lower towards the $6100 level, we’re going to be in a new, lower, trading range come Christmas.
However, since we’re trading the range, then the range demands we long/close shorts approaching support and short/close longs approaching resistance. So, our swing setup will be to long the $6120- $6200 USD zone once again (perhaps with a smaller position), stop loss $6050 USD and take profit at $6700 USD. Furthermore, as you can see on the RSI, momentum is forming a triangle which points to consolidation, and eventually, expansion. So, observe the breakout/breakdown on both price and RSI as a confluence for the strength of a move.
As for swing setup, any pullback to resistance at $6500 $6520 USD can be shorted with some confidence.
Turning towards Ethereum, price gunned for the first resistance zone at $300-$270 USD we mapped out in our long-term levels to look at. However, a sneaky wick down to $250 USD in August 2018 proved to be resistance to bank profit on our longs between $210 USD and $180 USD. This is why active trade management can be so crucial, since this level formed as resistance for nearly 3 days before price moved with the wider market rout over the weekend. Remember our recent daily bullish RSI divergence? Well, we also go a decent bearish daily divergence on the RSI, which was also telling us price weakness at resistance. Although, usually I only pay attention to divergences when they are in the extremes of their ranges, so RSI levels at 70-80 or 20-30.
As with Bitcoin, the market structure has shown us where resistance definitely is and now we’re heading to test support, so the next take long zone would still be between $200 USD and $180 USD, with potentially a few wicks to test $169 USD. However, should Bitcoin and the wider market rout and find new lows under $6000 USD, all bets are off for Ethereum finding support at these levels, and we should consult our long-term levels for our next long line in the sand.