Yesterday I showed you the condition to execute the long trade on the 4h timeframe. Today’s morning I bought the Bitcoin at the price of $18500 after the appearance of the increasing column on the 4h MACD. I suppose that the bounce have already started, but today I received the data that the bear market did not end.
Where is divergence on the 1D?
The divergence which could end this bear market was broken. The first increasing column on the MACD appeared when the new low broke the previous low’s level. To be honest it slightly broke, which is the downtrend weakness sign, but the trends usually does not end in such way. Why the divergence is so important? Because all trends end with the wave 5, which have to form the divergence with more impulsive wave 3. That’s why I am waiting another one dive for BTC after the bounce. If you take a look a the chart you can notice the red V-shape recovery, but in my opinion there is 10% probability of such scenario. It’s possible only in case of inflation decrease and the FOMC monetary policy with the printing new amount of money. Also this scenario considers the quick recovery, but the next FOMC meeting will be only in the end of July. Thus V-shape recovery is really almost impossible, eyes on the violet scenario.
Weekly timeframe: divergence but weakness
Let’s take a look at the weekly Bitcoin chart. The bear market started with the strong divergence on both MACD histogram and line. But now we can see non-confirmed weak divergence with MACD and no divergence with line. For me it’s obviously that we have to see another one wave – wave 5 before the dump to approximately $14k which many traders are dreaming so much. We will see this level but only when most of traders will not be able to buy there.