Price tested $16.3k Resistance
After testing a small demand zone @ 14k after bouncing off of a HUGE support structure at the $12.5k price point. The main area traders were hoping to breakwas the 16.6k resistance structure in order to see a nice rally back towards 20k. As seen below, we saw the price breaking the structure nicely, sending out possible signals that price was ready for a nice rally and making the bulls jump with joy. However, price moved all the way from 14k, so its dangerous to buy off the breakout - and as we can see, the candles have lost some momentum after breaking the resistance structure.
If the candles break out closer to the trend line or structural support/resistance, then there is less risk with taking the trade off the breakout when the candle closed. However, the further away the price is from the actually structure, the higher the chance that it will lose momentum after the break out due to the length of the move - whether its bullish or bearish.
Price Retests $14k Demand Zone
So once price has lost its momentum, we are currently seeing the candles retest the previous demand zone at around $14k. Bulls like the fact that there is a large wick that tested the zone, and failed - creating another possible bullish rally. The best part about this is that the demand zone is that much stronger now that it has been tested on 4 seperate occasions as both a supply and demand zone, meaning that it is a great reaction point for future trades should price start gravitating towards that area.
Overall, if you are basing your trades off the 4 hr chart, there is currently no real play here. We are seeing price stay in between the 2 structural areas and the bulls are just waiting to see where the momentum will take the candles. Personally, I'm hoping for a re-test of the $14k demand zone for another possible entry.
Happy Trading!
hodl hodl hodl... right? Through ups and down, just hodl forever and then we can say we could cash out and be wealthy... but not now. Now we hodl. @ironshield
Absolutely! Im not sure if I believe it'll go to 100k, but trading wise it is supporting these levels very well, tested multiple times so I have confidence we'll be seeing a rally within the next few months. It took a long time just to get here so we can wait another year :D
Thanks for a detailed explanation of all this - I know the basics of reading candlestick charts but I still have trouble understanding them and using them productively. Do you have any suggestions on resources to help educate myself?
In the meantime I'm very thankful for posts like these!
I learned everything off of babypips.com - which is a website dedicated to technical analysis for forex traders. In terms of actual usage, it'll all be about practice - so if you want to get more comfortable you can always create a demo account.
Another way to learn is to follow traders on tradingview.com that you like. A lot of them use basic technical analysis as trading signals, my personal favorite is below:
https://www.tradingview.com/u/FxCanli/
This is great! thanks so much for the suggestions! :D
Great analysis. What is your short term thought on LTC?
LTC is tricky right now because its testing a really nice demand zone on the 4 hr chart. The distance between the demand zone and the structure above it is fairly small, so I'd wait for another breakout of the top trend line before I take a position.
Awesome analysis! I like how you explained everything, you didnt just put up a chart and a couple words like most.. being thorough is important especially since im always looking to learn more.. thanks!
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