[The Daily View] — July 4, 2018 by Kemosabe
By: Cypher Core
Tags: Trading, Blockchain, Crypto, Bitcoin, Cryptocurrency

The 4 Hour View

Bullish arguments

Zooming out to the 4 hour, I drew a box earlier this morning after the large pump expecting this past resistance zone to turn into a support. The order blocks are typically a pretty decent price structure to flip horizontal support and resistance levels. So far looks like it’s turning out.

If we take a look at that order block zone from 7-2 16:00:00 UTC → 7-3 20:00:00 UTC just prior to the minor dumping (which filled my long orders yesterday), we can see the Point of Control at around $6576 which shows the where the most volume took place, anyone who had shorted here is underwater and will likely close at a breakeven creating a support for the price.

Expanding on the price range using a fixed volume profile between 7-2 16:00:00 and 7-4 08:00:00 (in between the 2 impulse candles, or pumps, we can see the point of control in that entire range was just about $6610, which also means any shorters here are still underwater and will likely close to create a similar support.

Not to mention this is a decent retracement from the top around $6800, where if anyone got shorts filled (an obvious place to short, strong resistance) they might consider taking profit in this region, due to it being a previous resistance zone.

It seems like the Fibonacci retracement between $5743–$6820 has shown some good support/resistance levels, although that’s kind of a hindsight observation because obviously we didn’t pump up to $6820 until this morning. Either way this puts the .236 at $6556.8 (let’s call it $6557) and would match up well with price support.

Bearish arguments

I’m not liking the bearish divergence on the RSI, however the OBV is still confirming the upward trend which is always a good thing. I would give the OBV more credit than the unconfirmed beginnings of a bearish divergence on the RSI.

4HR Chart with all the above:

The 1 Hour View

Bullish arguments

Looking at the 1 hour, we see somewhat “rounded” price movement, usually is a good sign that the price will move opposite the direction the curve is inclined towards, like this:

Bearish arguments

However, I’m not 100% convinced for bullishness because there’s a ton of resistance and probably the same amount of people trying to short $6800–$6950 as well as some “oversold” indicators and divergences beginning to form on both lower and higher time frames. For example, bearish divergences beginning on the 1 and 4 hours, while hidden bearish on the Daily RSI.

The Daily View

Bullish arguments

A quick glance at the 1D chart and I see a couple of things. The daily candle so far is a bullish engulfing, which is usually a strong move on btc, but more so in a downtrend. (look at 6/29 candle for example). However a close above yesterday’s open at $6610 would give this more weight. The consistent volume increase along with price, usually a good sign that the buying interest is still there since our move up from $5743.

Bearish arguments

I have seen people mention OBV diverging, but it depends on where today closes, because technically it is still lower than previous closes near this resistance, which reduces the credibility of a potential OBV divergence. If tomorrow has a nice move up with significant volume, this could be discredited entirely. This is not something to forget about though!!!

I will say I am not 100% happy with the daily OBV compared to our last test of this resistance around 6/20, which is where people are calling the previously mentioned divergence. With that said, it has recently been trending up, and breaking out of a large diagonal down trend starting 5/13, shown below.

Trading Plans for Both Cases

I’d personally wait and try to long $6575–$6625 areas, or maybe short the higher zone that I just mentioned above between $6820–$6950 while keeping a SL behind market structures so you aren’t wicked out on a stop run. Some more reasoning is justified through the use of fixed volume profile analysis.

And just doing a quick fixed volume profile over the daily candles from 7/2 until currently, the most volume took place at $6600 almost exactly, a nice round number, but considering the most volume occurred there longs will probably defend their position, and shorts will probably close since they’ve been underwater.

There is a lot of of bullish sentiment and many people think the $6800 zone won’t hold on our next test. While it will be healthy to retrace more before another large move up, I think that a similar force can be generated just through consolidation and a minor retrace, while at the same time “resetting” the lower time frame oscillators.

Unfortunately the daily is starting to form some hidden bearish divergence as well as lower time frames beginning to form regular bearish divergence, so we’re really gonna need volume to help us out. The beginning formations of divergences don’t hold too much weight, and definitely not as much weight as volume, which we have seen time and time again throughout the past.

Overall, I’d say I’m more bullish than bearish right now, especially as a whole, but I’d wait for a proper entry on either side. I am personally holding on to my long for now and will re-evaluate upon price touching either areas mentioned above. Most likely if $6600 breaks, $6400 will hold, but I will analyze this in the scenario that $6600 breaks.

Also take into account, the closer price stays to a support or resistance, and the less time passes before retesting it, the less likely it is to hold.

Author: Kemosabe