BTC Trend Analysis and Penny Coin Entry Level

Halving and RSI

We are just 6 days away from the anticipated Bitcoin halving event. There is a large amount of speculation as to what the price may do as a result. All one can do to prepare is analyse the intraday trends and risk the appropraite amount of capital after forming a bias based on solid technichals.

The chance of the market falling as a result of the halving is the same as the chance of it rising when you start out. Given the recent price movement, testing the 9000 range, and atempting to regain March price trends, there is clearly a bullish sentiment in the last 6-9 days. This price action seems impulsive, with +1711 (%22.14) gain in just 27 hours. Since then there has been a very moderate pull back and aggressive buying on the dips forming on the lower time frames.

The Divergent Wedge

Looking in on the hourly frame reveals the formation of a wedge over the past 5 days, beggining after the above mentioned 27 hour large price move on the 30th. This wedge brings some concern as price consolidation like this can be unpredictable when it does break out, regardless of which side it gravitates towards.

BTC Hourly Chart May 5th

A particularly bullish sign in confluence with the recent sharp price movement upwards is the formation of a bullish divergence with the RSI and price forming along the lower boundary of the wedge.

As denoted by the ellipses circling the correlated lines, the price has formed two lows, with the latter low being higher than the first in the price action, whereas on the RSI there was a lower secondary low. This signifies sellers losing their grip as this wedge forms, creating a high chance of a breakout to the upside.

Specific Levels

BTC Hourly Chart Mid-March Trendline

The trendline coming up close to the wedge denoted "mid-march trendline" was formed over the last 53 days, seeing the full rise from the March lows of high 3800 to the recent rejection at mid 9400. Seeing as this trend line has been tapped on before for support. It is entirely likely we see another pull downwards towards that line. The reason being that market sentiment is about 50/50 on the halving, there are still some people worried and uncertain and if a sell-off begins in this wedge they can cause an increase in the velocity of the selling, amplifying losses across the market.

The likelihood of a scenrio in which BTC decides to deviate from what is has done in the last 3 halvings is not high but not impossible. There is a continuously increasing number of new walltes joining the system. Just recently a very popular stat for crypto sites to quote was the coinbase surge in purchases of 1200 USD in BTC when the first stimulus checks went out. These newcomers will be going through their first halving event and it is often made up to be a huge date when in reality the surge in price follows over the course of a 2-4 year period, just in time for the next halving which occurs every 4 years worth of block production. Therefore short term capitulation, allowing for entries of cheap longs in the 8000-8300 range.

Penny Coin Strategy

This short-term capitulation scenario may be being front-run by ADA. It has had a clean downward trend over the last 5 days, reversing the gains it made and currently struggling to break above 0.05 USD again, after failing to gain traction above the level four times in the same last 5 days. If you aren't familiar with my Penny Coin Strategy, I advie you read up on it here.

ADA Hourly Chart

There is good reason to believe this pattern will run another simliar cycle, giving rise to cheap entries in the 0.04300-0.04600 USD range. The bullish RSI diveregance occured on ADA during the same time as the BTC divergance, showing continued correlation. With ADA being so low in price, the opportunity to get an even cheaper position for a long into the coming run up in BTC price is a prime opportunity which is reminiscent of the 2017 altcoin market.

Final Remarks

There is reason to be cautious at this point in time. Smaller initial investments with regular scaling up or down of your position size as price develops would be prudent in the coming week. There will surely be chances to enter into a useful level somewhere in the near future and setting up limit orders now to swipe up cheap entries on impulsive moves is the most efficient way to ensure you profit from this next leg up. The specific price levels I am concerned with are BTC being in the vicinity of 9750 by May 11th and ADA being between 0.0550 and 0.0600 in the same time frame due to its heavy correltion with BTC.