Bitcoin Ends A Bullish July: Here’s What To Watch Heading Into August

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Bit­coin BTC/USD was trad­ing most­ly flat dur­ing Sunday’s 24-hour ses­sion in con­tin­ued con­sol­i­da­tion after surg­ing 15% over the course of Wednes­day and Thursday’s sessions.

The con­sol­i­da­tion is help­ing to keep Bitcoin’s rel­a­tive strength index (RSI) from soar­ing up into over­bought ter­ri­to­ry at the 70% mark.

Bit­coin has gained 19% since the begin­ning of July, which caused the crypto’s RSI to cor­rect from 29% on July 1 to the 60% lev­el as of press time. The momen­tum com­ing back into Bit­coin has caused the fear and green index mea­sure­ment to improve slight­ly from “extreme fear” in June, mea­sur­ing in at 11, to “fear” in July, mea­sur­ing in at 39.

The cryp­to’s con­sol­i­da­tion phase is tak­ing place in an inside bar pat­tern on the dai­ly chart. An inside bar is usu­al­ly fol­lowed by a con­tin­u­a­tion move in the direc­tion of the cur­rent trend.

An inside bar pat­tern has more valid­i­ty on larg­er time frames (four-hour chart or larg­er). The pat­tern has a min­i­mum of two can­dle­sticks and con­sists of a moth­er bar (the first can­dle­stick in the pat­tern) fol­lowed by one or more sub­se­quent can­dles. The sub­se­quent candle(s) must be com­plete­ly inside the range of the moth­er bar, and each is called an “inside bar.”

A dou­ble, or triple inside bar can be more pow­er­ful than a sin­gle inside bar. After the break of an inside bar pat­tern, traders want to watch for high vol­ume for con­fir­ma­tion the pat­tern was recognized.

  • Bull­ish traders will want to search for inside bar pat­terns on stocks or cryp­tos that are in an uptrend. Some traders may take a posi­tion dur­ing the inside bar pri­or to the break, while oth­er aggres­sive traders will take a posi­tion after the break of the pattern.
  • For bear­ish traders, find­ing an inside bar pat­tern on a stock or cryp­to that’s in a down­trend will be key. Like bull­ish traders, bears have two options of where to take a posi­tion to play the break of the pat­tern. For bear­ish traders, the pat­tern is inval­i­dat­ed if the stock ris­es above the high­est range of the moth­er candle.

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The Bit­coin Chart: Bitcoin’s inside bar pat­tern leans bull­ish because the cryp­to is trad­ing in a fair­ly con­sis­tent uptrend. Sunday’s can­dle­stick is print­ing near the bot­tom of Saturday’s moth­er bar, how­ev­er, which may give bull­ish traders pause.

  • If Bit­coin falls below Saturday’s trad­ing range on low­er-than-aver­age vol­ume, the pat­tern will be inval­i­dat­ed. If a break low­er comes on high vol­ume, traders can watch for Bit­coin to print a high­er low above $20,715, which could indi­cate the uptrend is intact.
  • If Bit­coin breaks up bull­ish­ly from the inside bar pat­tern, Saturday’s low-of-day may serve as the next high­er low with­in the uptrend.
  • There’s a pos­si­bil­i­ty Bit­coin could be print­ing a bull flag pat­tern, with the pole formed between Wednes­day and Thurs­day and the flag formed over the 24-hour trad­ing ses­sions that have fol­lowed. Con­ser­v­a­tive traders may decide to hold off on bet­ting the bull flag pat­tern will play out until Bit­coin breaks up from the pat­tern because of the upper wicks on Fri­day and Saturday’s dai­ly candlesticks.
  • If Bit­coin drops under the eight-day expo­nen­tial mov­ing aver­age, it’s like­ly the bull flag has been invalidated.
  • Bit­coin has resis­tance above at $25,772 and $29,321 and sup­port below at $22,729 and $19,915.

See Also: If You Had $10,000 Right Now, Would You Put It On Bit­coin, Ethereum Or Shi­ba Inu (SHIB)?



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