Sunday Synopsis #12: Lazy Sunday & Labor Day Monday Edition
"Lazy Sunday, wake up in the late afternoon.."
Hope everyone had a nice long weekend (if you had one). I guess it’s time to get back to business. This post is coming after a bit of a selloff. It occurred on Monday so technically that wouldn’t be part of the weekly update but I’ll make this a sorta joint Sunday/Monday posting. Also for some reason, last week I thought I’d be needing to make a new quarterly update post this week. That’s actually coming next month. I’ll figure out calendars at some point. I’ll be including the links to my shared charts with all the data and annotations. I made a quick video about them last week. Also if you didn’t read my “Tale of Two Bitcoins” post, you really should. It’s all going according to my speculation so far.
BTC Chart <—- chart link
BTC had a stellar weekly close on Sunday. There was a strong close over a weekly resistance level. As I’m not a big advocate for breakout trades confirmation of some sort is something I’d be looking for. A test of the new support at $49k or a lower timeframe picture would indicate if caution should be thrown to the wind and to buy the strength. The next higher resistance is around $60k. We all know how the next day turned out so let’s just get to it….
The bearish divergence, when prices increase and oscillator measurements decrease, has been building up for weeks. It’s only a matter of time until prices will correct. The stats on this are staggering. The insights to be gleaned from the daily chart are that the lower support zone held around $43k, that may be the floor we’ll look to hold on a retest. The price also managed to close up above the 50-Day EMA and in the zone I’d designated as the ceiling of our local range. We can see here on the chart that the breakout failed hard. At the bottom of the chart, I have the Cyclic RSI I’ve shared. I put a star next to the crossing up of the bottom band. This is a risky signal of the start bullish price movement. Also note how the RSI is about to also cross back below the bottom band. This would be a more conservative signal of bearish price continuation.
Looking at the 2HR price is consolidating at the bottom of the “ceiling” and the RSI is moving towards the bottom band in oversold territory. While a cross above would be good, it’s a risky signal. After volatile corrections, I like to see a second test of support creating a higher low on the oscillator. This would give me confidence that a rally could be supported by buyers. I’ve added on a couple of fake candles and drawn out the RSI into the future illustrating a scenario that would make me think bullish prices were on the horizon. The 50-Day EMA and support zone starting around 45k is an area that I think will be tested and I’d watch for some bullish candles patterns there to support the idea of a potential rally. Failure will likely lead to a test of the recent wick low at the bottom of the support range at $42.8k.
ETH/BTC Chart <—- chart link
There’s a similarly bullish chart in the weekly snapshot of ETH relative to BTC. The RSI doesn’t have any real insight in this timeframe, except for the fact that if the next week surpasses the recent highest highs it will likely set up bearish divergence as the oscillator is measuring quite lower than the previous price peak.
One of the neat things about sharing the charts is I can leave notes on them that anyone can see. If they check in on them. Last week I was concerned with the zone I considered the “ceiling” on the daily chart. Being a former resistance I supposed it was likely to see people selling their short-term ETH profits back to BTC. Note how both times the RSI broke above the top band price action matched it with a bullish move. This is a more conservative entry signal when paired with a price action candle pattern. Prior to the 5th, there was a hammer candle followed by a bullish engulfing candle, the next bar hat the high spike wick, although it would be a risky proposition as the trade was barely above support. The move in September unfortunately woutld’t have had a good confirmation signal. Tell off from the top resistance found support above the 50-Day EMA. I expect that to continue to be along with the 0.0684 line. I think a test of those again is likely with the down-turning RSI.
Looking at the intraday picture we see multiple breaches of the bottom band. The price is similarly matching the oscillator with lower lows. I don’t really expect a lot of explosive bullishness here. A rally would likely bring the price up to test the 50-period EMA but with no bullish divergence between price and the RSI I’m not planning any longs on the short-term with this picture.
ETH/USDT <—— chart link
There’s another bullish new weekly high close in the area I’m labeling the “ceiling” so it’s a good thing so long positions should be executed with caution. Note the bullish engulfing candle pattern I boxed out in yellow, followed by the crossing above of the bottom band. That would be a risky entry signal, but with the weekly support structure holding, I’d feel comfortable taking that trade.
Moving to the daily chart there are a few things to note. First, the bullish divergence from late June to early July followed by the breaking of the top band on the RSI and bullish trend continuation. I’ve also highlighted a fantastic candle pattern setup in early august. a bullish engulfing candle on a test of a support zone followed by a hammer candle. That combination is a huge sign that bulls want price to increase. Price continued up and you can see when the RSI fell back into the bands and momentum waned in price action and fluttered between resistance and support. The recent bullish price spike set up bearish divergence as the RSI set a lower high than a prior peak. The 50-Day EMA has provided support on this correction. along with a recent descending trendline. If the price continues up I’m going to move that trendline into the “broken” category.
To make a plan off the intraday chart I’m looking for a plan intraday, the support line at $3375 is being tested. The RSI is turning up but it’s not over the bottom band yet. I wouldn’t want to jump the gun on a long trade. The RSI is in line with price and there’s no divergence currently so I don’t have a reason to suspect that the near-term downtrend is broken until I see some high highs and higher lows. I’d expect bottom support of the 50-period EMA to hold if the horizontal line fails. IT’s something to keep an eye on.
Sorry. I was soo pooped last night I didn’t hit the send button. I’ve finished up coding for most of the indicators and now and doing testing to make sure it’s all running smoothly. My next goal is to have a good video to post for Thursday on the Cyclic RSI script I’ve shared. Hope you all have a great week.
@theprivacysmurf