Our Trade Recommendation is now status “Pending”. The declining wave had halted just a few pips above our entry level and the indicators show that a move higher is now required. The retracement may see price return to near the level of the 200MA and if our wave count is to be validated, price should not advance above the 200MA and the previous high where it touches the 200MA.
During the recent drop price had fallen through the intersection of a Fib line and a rising channel line – a mechanism that is often employed as a means of crossing strong support/resistance. This fact gives us some confidence that our expectation of a declining wave is on track.
The immediate prospect, of upward retracement, could advance quickly through the intersection while it is still available. If price reverses back down from below the 200MA and falls below $245 and 1520 CNY, then our Trade Recommendation’s condition for opening a sell position will be fulfilled. Until then we have to be mindful of the erratic price patterns that have characterized the sideways consolidation phases.
There is also the possibility that price may not make it through the resistance of the overhead MAs, Fib line and channel line and turn down sooner. Once decline commences, if it does, our Trade Recommendation is ready to catch the wave. We cannot be sure how far it will drop, so be sure to use a dynamic stop loss as discussed in the TR and in the Trading group.
(Price later resumed the downtrend and the xbt.social trade was activated)
Summary
The Bitcoin price chart contains five waves down from yesterday’s high. There had been reverse divergence on the low of wave 3 (red dots in RSI in the chart above) but the instance cleared the way for wave 5 to make a new low, which it did without divergence, and giving us reason to expect another price low. If the yellow support gives way, decline will accelerate. Holding price above it is not yet bullish, but implies strong buying support going into the new week.
Bitfinex Buy/Sell Volume shows the price battle here near the lows.