Bitcoin price fell away from yesterday’s strained highs, but a price correction introduces some uncertainty about what’s next. Previous price patterns suggest the decline will continue, but simple technical analysis helps us plan contingency, and identify the confirmation of decline.
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Time of analysis: 14h00 UTC OKCoin 1Week Futures 1-Hour Chart
From the analysis pages of xbt.social, earlier today:
xbt.social subscribers opened a short position after a combination sell signal fired in both the 1-hour and 15-min charts, earlier today.
It is not unusual for the market to test the 1hr 20MA after an initial wave of decline. Magenta arrows in the 1hr OKCoin futures chart, illustrates this corrective pattern.
The structure of the wave presently pushing higher looks typically corrective – and not like a new wave of advance. However, we can never say never in the market, hence xbt.social risk planning dictates that we close our short trade if price prints any new high above yesterday’s wave top.
One other painful scenario is illustrated by the blue arrow. The market can complete the current corrective wave, yet still fail to decline, and re-enter the tortured sideways slog it has become prone to lately. In this case, price will creep toward our stop-loss at the previous high and knock us out of the trade for a small loss.With most of the possible outcomes covered, we want to see price decline below the 1hr 200MA (red) which will be a confirmation of additional decline and give us an opportunity to increase our short position’s size (or increase fiat allocation for buy-and-hold). Summary Bitcoin price had declined from overbought conditions […]
