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Weekly Bearish Scenario for BITSTAMP:BTCUSD by dperet

Hi everyone!

I believe this cycle is repeating the same fractals seen in 2013 and 2017. On the weekly frame, BTC got rejected on a major resistance, which if broken would flash a buy signal in the Supertrend indicator (picture below). Since the liquidation that occurred after the rejection, BTC came as far as to touch the 21 weekly SMA (blue line) which is paramount to hold in order to keep the bullish price action. At the same time, the 21 weekly SMA is already pointing downwards which should slowly put some negative pressure. The WaveTrend Oscliator is now crossing bearish (and so is the MACD ), and for that reason I have marked on the chart other situations and results when this occurred. To enforce this scenario, the cycle TOP indicator (which nailed every TOP) has flashed already in may. One might argue that the TOP indicator flashed twice in 2013, but that time the 21 weekly SMA kept upwards and so did the 200 daily SMA , which is also now pointing downwards. And because of that, the recent golden cross (50 and 200 Daily SMAs ) is not only a lagging indicator but is only valid if both averages have positive momentum.

I do believe that this cycle is looking too short, and probably because of two reasons. The first one regarding Tesla accepting bitcoin . Although we were already in a rally before this announcement came out, it probably made BTC too parabolic to hold its momentum and therefore we ended with a blow off top too early. Also, Tesla halting BTC acceptance for payments and China´s crackdown on BTC mining didn´t start the correction, both just exacerbated the meltdown enough to create a huge spring which resulted in the recent rally.

If the same fractal plays out, we might be slowly entering into a bear market and then bottom at the 200 weekly SMA (pink line). To invalidate this (which I hope), BTC must hold above the 21 weekly SMA and eventually breakout of the resistance line. Although we have some really positive news coming out, like El Salvador making BTC a legal tender and a few other small countries following along, and the expectation of an American ETF approval by October, the timing must be flawless. Since we are probably getting a relief towards the resistance line at some point, huge news may be enough to breakout and to keep pushing the price up.

Thanks for stopping by! Let me know what you think in the comments below

Supertrend Weekly rejection:

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