Last week we saw 7 days red in a row which is the new record during this year.
Bitcoin has reached the key reversal area that is backed up by multiple support levels (more details down below). The price is already trying to bounce off from this level and is creating higher low. At the same time, has created a lower low and pointing upwards. So when these two aspects are put together, we get the very first signal of the hidden divergence.
What does it tell us?
It signals that the uptrend will continue and it gives opportunity to buy. Since divergences statistically have better track history on higher time frames, then this should be considered as a serious one as well. Once it tries to push higher, it should be expected to be accompanied by buy.
It’s not wise to rely solely on just one signal but to look for additional signals that support upward movement. What I have learned from my past experience is that Hidden Divergences tend to fail more often if you do not have anything else that supports the upward continuation. That’s why it’s wise to look for them. They can bepatterns ( , tweezers, etc), starts expanding, or regular divergences on the lower timeframes (e.g. 4h).
The support zone is formed by the uptrend line (bottom of the channel), 0.618 fib level (statistically most of the reversals happen from this level), the neckline of IH&S pattern + dailyformed in between of $6,900 – $6,700. This should offer enough of support not to pierce through. The next is in between of $7,281 – $7,400 levels and should be the first target.
There is no rush to enter into this trade. Sometimes it’s good to wait until the dailycloses which reveals plenty of information where the price wants to move and if the bulls had control over the price or not.
Things to Remember:
- Stop-loss orders are strongly recommended.
- Beware of buying tops or FOMOS, you might end up losing or waiting long periods of time before getting anything back.
- Do your homework before investing.
Please be aware this is not financial advice. You are responsible for your trading and investing decisions. It is highly recommended to do your own research before investing in anything.
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Also published on Medium.