Positive diversions, is inversion ahead?


After a couple of days down, where Bitcoin has discovered a new annual low, BTC is currently attempting to violate the channel's top trendline.

A breakout could lead to a temporary upward trend, but since my Elliott wave count suggests that the downtrend is not over yet, I'm playing on the safe side. There's another leg down for wave 5 of 5 of C if my wave number is correct.

That said, looking at the daily chart, we can see a new lower minimum while the RSI indicator creates a lower minimum. This situation is called positive deviations, and usually suggests that the bearish momentum is slowly fading, while a rise is expected.

RSI is a useful tool, however like all other technical indicators; it should be taken with a grain of salt. The price action and the volume of trade are always the best parameters to consider).

Most of the major Altcions are following Bitcoin at the moment, and we can see a diagonal descendant developed in many graphs. This diagonal may take longer to develop, like a higher degree of tendency, or it could be almost complete; we will have to wait and see.

A downward diagonal is usually a sign of weakening sellers and most likely leads to an upward breakout as soon as the upper trend breaks down.

Next week could play an essential role in the medium-term direction of the market.

Ethereum had retested the 80 $ of the regions in the last 48 hours. He just created a new low and went up to test the upper trend line.

Looking at the 4-hour ETH chart

  • ETH is currently trading around the price level of $ 85 and is testing the channel's top trend line, following the Bitcoin chart.
  • If this line is violated, the next target can be found at the price level $ 97 – $ 100, which is also the next resistance level. However, if this violation turns out to be a fake (bull trap), it could be quickly dismissed by the 55-EMA, currently located around the price level of $ 90.
  • At the moment there is not enough volume to support the mentioned breakout, so in case the resistance strength of the ETH waste trend line and the price falls, then ETH will test the $ level again. 81, and a possible break below it to the next support is at the $ 69 price level.
  • The 4-hour chart RSI is currently testing level 50.
  • My Elliott count is marked on the daily chart. According to this count, ETH has another leg lowered for the 5 out of 5 wave to touch the lower trend line, while the RSI is creating lower at the same time.
  • For the bulls: the best scenario I could wish for would be another downward movement like the 5th wave to the next target in the $ 69 area, but, I'd like to see the RSI create another higher minimum at the same time. This could be the last signal for my next long-term position: completion of an Elliott count + RSI signal + maintenance of daily support level.

BitStamp ETH / USD 4-hour chart


Graph 1st day BitStamp ETH / USD


TradingView cryptocurrency charts. Coinigy technical analysis tools.

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