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May 16, 2018, 10:29:48 PM |
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4H bullish divergence showing, bounce/reversal looks likely.
PRICE ACTION LEVELS
Resistances
First and foremost, we have to break above the $8.5-8.7k zone of resistance and trade above on higher time frames.
Following $8.7k we will target $9.1k as an intermediate zone of slight resistance, similar to $9.4k.
Supports
At the moment we see price bouncing away from the $8.1k zone we have highlighted throughout the week. This zone is created by previous price action, as well as multiple indicators. Should $8.1k hold the next crucial zone of support is from $7.9-7.7k. If $7.7k does not hold a break back into the $6000s would not be out of the picture.
INDICATORS
Moving Averages (same situation as yesterday)
The 50 MA held as support for now. The next test is to see if we can turn around and break back above the 200 EMA after breaking below it so recently. Above that we still have the prevalent 200 simple moving average to breach.
Ichimoku Cloud (same situation as yesterday)
The 1D cloud remains intact with the tenkan above around $9.1k. Zooming into the 4H this level is also important as the kijun hovers around there as well. As stated before, based on cloud metrics, as long as we stay in the cloud the opposite edge of the cloud ($11.7k) remains in play.
Oscillators
The 4H oscillator (RSI) is now showing a pretty exaggerated bullish divergence, from an extreme level, at support. Due to this being a higher time frame level with the confluence of support there is a high probability that this level holds and provides price with a move back upwards.
Conclusion
Price looks to be coiling up for a move back upwards.
This weekly level around the high $7000s below price at the moment really needs to hold for the current rally to continue.
The 4H bullish divergence is textbook and also taking place right at support, meaning it would be a surprise if price did not catch a bounce at this level.
As it stands, this move on a weekly chart looks like a break of resistance and then a retest of the level. Although the last few days have been rather bearish, keeping a macro outlook on the chart allows you to keep a level head when making financial decisions, as well as remain patient.
Twitter: @BoomerCapital
Web: boomerangcapital.org
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