Bitcoin saw a bearish engulfing candle form on the daily, and a big rejection painted on the weekly candle yesterday when it got rejected at $4200 resistance. The FOMO in the market was real on the build up to last week with longs reaching 60% and the average investor very happy Bitcoin formed a higher high. This high lasted only a few hours before price was rejected with a strong fade out, perfect.
I believe now on a smaller time frame we are having a small relief rally where there are 4 types of buyers:
1. The people that wanted to buy last week on a pullback, but the pullback never came. Now they have an opportunity.
2. Buyers/ scalpers on the mid range of the parallel channel.
3. Oversold RSI buyers on smaller time frames. - This includes myself as i did scalp a long from the drop for a quick gain.
4. Buyers from the old trend line resistance, which on some exchanges is acting as support (on Bitmex it is not).
Therefore, I believe we are going to form a bear flag now with a small rally, before we get another drop. Target taken from length of the pole, or for me how I am trading this a 1:1 extension of Wave A to the top of Wave B. The 1:1 extension is my first target. SL placed above $4040 for me in this trade, as that is my invalidation price for this setup.
I believe now on a smaller time frame we are having a small relief rally where there are 4 types of buyers:
1. The people that wanted to buy last week on a pullback, but the pullback never came. Now they have an opportunity.
2. Buyers/ scalpers on the mid range of the parallel channel.
3. Oversold RSI buyers on smaller time frames. - This includes myself as i did scalp a long from the drop for a quick gain.
4. Buyers from the old trend line resistance, which on some exchanges is acting as support (on Bitmex it is not).
Therefore, I believe we are going to form a bear flag now with a small rally, before we get another drop. Target taken from length of the pole, or for me how I am trading this a 1:1 extension of Wave A to the top of Wave B. The 1:1 extension is my first target. SL placed above $4040 for me in this trade, as that is my invalidation price for this setup.