BTCUSD - the breakdown of a breakdown

19 thg 3

Using the BTCUSD 4H chart, here I show how to do:
1. Projection for upside target;
2. Identify and qualify a breakdown.

First, if you scroll to the left of the chart, you will see that a rally and retracement was identified. An arrow was mapped to the length of the first rally. Then clone the arrow and shift the clone to start at the bottom most point of the retracement. This extension rally typically has a few characteristics...
a. MACD and VolDiv will spike high and cross down, but linger in the bullish area gradually falling (as opposed to a quick cross down and drop below the zero line); and
b. Price will rally and stall and repeat a pattern of higher lows and higher highs.

Now, typically, an extension rally should target for the 1.62 Fibonacci level before a proper stall. But in this case, a stall came in about 1.23 Fib level. This has been observed to frequently happen and then it can rally up another extension to 1.62.
As in this case it failed and started a breakdown pattern.

The breakdown pattern starts with a flattening out of prices. In this case, price started deviating from the projected path.
This comes with a bearish divergence in both MACD and VolDiv, in the forms of lower highs as opposed to price higher highs.

Then, a series of lower highs and lower lows will form... this is shown in the blue line. Note that the level formed by Point C is the ultimate breakdown level. once price completes the pattern and breaksdown below Point C, it is completed and a flush down typically follows.
By this time, the technical indicators MACD and VolDiv should clearly show a crossdown into the bearish area below the zeroline.

So, we then can do the projections to the downside, in a similar fashion. This time instead of using the arrows, the Fibonacci levels are shown...
For this case, a confluence is seen about 62K... and hence, expected a bounce about that level. But the target is a little further down at 60K. (Yellow and Red ellipse, respectively).

I had earlier posted via mobile a 62K target and within an hour or so, it swiftly hit that level.
Now to watch how it breaks down to 60K...

So there you have it, my descriptive of how I identify the trend change / retracement / pullback.

PS. I wanted to mention that time line on 14 March 2024. It was drawn in advance and denotes the peak point in time.
The next is about a month's time where is should bottom out in the middle of April (not shown in this chart.