Bitcoin Update: 1 of 3 possible paths

Sorry for not updating you all yesterday. I've been dealing with some family issues.

Bitcoin continues to send mixed signals. The 3 scenarios I gave you last time are still in play. There's support at $7,340. If that breaks, the next support area is found at $6,815. It looks like a bearish pennant has formed on the 1 hour chart. This may signal a small drop is coming.

If this bearish pennant is validated, I expect 1 of 2 scenarios. The first has bitcoin in a WXYXZ pattern. We've discussed this in the past. It looks like bitcoin may have completed wave A, with wave B nearly complete. This would leave wave C. The target of wave C would be between $7,150 and the $6,815 support. Here's how it may play out:

The second bearish scenario has bitcoin in 5 waves down, with wave 5 yet to complete. The target for wave 5 is approximately $7,140. Here's how this may play out:

The third scenario is bullish. This is not my primary, but it is a possibility. It has bitcoin having completed a WXY pattern, with wave 1 of 5 currently underway. Volume needs to massively increase for this to be validated. The good news is, volume seems to be slowly up-ticking. If volume continues to rise, we may see something like this:

Looking at the 1 hour MACD, you can see bearish divergence. This is another sign a short term drop may be coming.

The 4 hour MACD is still being squeezed within a wedge. As it approches the apex, a breakout up or down becomes more likely.

The 1 hour and 4 hour RSI have developed a line of ascending support. They are about to be tested. If these supports hold, the bullish count will become my primary. If they break, we can expect 1 of the 2 bearish scenarios.

I also notice the 8 day EMA has been acting as resistance for nearly 5 days now. Breaking above would signal a possible momentum shift. Let's keep an eye on it.

BIAS:

Short Term: Neutral
Longterm: Very Bullish

I hope this has been helpful. I’d be happy to answer any questions in the comment section below. Thanks for stopping by.

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Disclaimer: I am NOT a financial advisor and this is NOT financial advice. Please always do your own research and invest responsibly. Technical analysis is simply a guide. It doesn’t predict the future. Anyone that claims they know exactly what’s going to happen is foolish, lying or both. Technical Analysis should only be used as a tool to help make better decisions. If you enter a trade, I recommend having a stop loss and sticking to it. You will loose at times. The key is to have more wins than losses. With that in mind, I wish you great success.

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